It looks like the second quarter lull in transportation is coming to an end. Now logistics appears to be having the opposite problem. As peak season coincides with ongoing PPE and other e-commerce shipments, we are looking at a capacity crunch.
Ocean rates are way up. Rates are up by more than 50% year over year for routes from China and East Asia to the East Coast, but that dwarfs the 145% increase from Asia to the West Coast, according to Freightos numbers. Blank sailings were the name of the game during the second quarter. Now, the Port of Los Angeles predicts that 900,000 TEUs may have made it to their shores in August.
This is putting carriers in a bind. The Wall Street Journal reported recently that the West Coast is absolutely slammed with imports, and the effects are trickling out as the rest of the system struggles to move it all inland.
Trucking had downsized during the height of the pandemic response, and now it needs to make a comeback. It’s not a secret that the industry had to downsize during the coronavirus, but now they have to get drivers back in the seat and trucks on the road. Capacity tightened after some operators went out of business and others have decided to wait out the pandemic.
This will, of course, impact rates. The Journal of Commerce reports that dry van rates have surged by nearly 60 cents to $2.40 in September. At the same time, trucking employment in August was still 5.5% lower than one year earlier. Capacity is only going to tighten as holiday shipping picks up.
So, I guess the moral of the story is that, if you’ve been sitting the pandemic out, now might be the time to jump back in?