Market Update | June 2021

June 16, 2021

Catch the latest on Operations and Carrier updates. Got questions, comments, or need assistance? Our team is ready, don't hesitate to contact our experts.

At Crane Worldwide Logistics, we are equipped to navigate the changes to best support our clients. We will continue to monitor the situations globally to keep you informed.

To see our previous updates, please visit our COVID-19 Resource Center. Follow this link for the latest on Brexit.

Many countries are still on lockdown; however, all our facilities and warehouses are operational. We have warehouse space available, ground transportation options globally, book air charters, and fill space on ocean carriers.

Ocean Update

Click the link below to download the latest Ocean Update.

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Commercial Air Operations Update

IATA released an information page listing airlines' status globally, which is free for all to access. Visit the IATA page here.

Charter Operations and Aircraft Availability

What charters do Crane Worldwide Logistics have available?

  • Capacity is available for charters globally. Contact us for current rates and availability.
  • If you have an opportunity, send us the details, and we can work on the current part charter capacity and pricing. Charter prices are based on current availability, and that could change rapidly. So size and rates have been fluctuating a lot over the past few days.
  • Crane Worldwide Logistics must have a signed charter authorization from our client before signing the charter contract with the provider.  Make sure you have someone standing by to sign agreements; capacity and rates change quickly.
  • On all charters, funds must be received from our client before they wheels up.

Air Freight Update

Access updated air freight information by region and country.

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Ground Update

United States

  • Truckload tender acceptance rates had been improving for several months following severe winter weather, but they have deteriorated again over the past few weeks since Memorial Day. The acceptance rates currently stand at around 72%, the lowest level in the past several months. As a result, truckload spot rate premiums still hold around 20%, even though contract rates have been resetting higher following a recently completed TL mini-bid. Companies conducting six-month bids got their truckload rates just increased another 5% sequentially and are now up double-digits year over year. Also, there's a strong parcel volume growth despite lapping big increases a year ago due to exploding e-commerce activity.
  • Consistent with the past few years, Outbound Tender Volumes dipped during the Memorial Day holiday and quickly rebounded afterward. Compared to the Outbound Tender Volume Index levels during this time in the previous two years, the current OTVI is 45.92% higher than 2020 and 57.25% higher than 2019.

Outbound Tender Volume Index Image

  • US trucking firms add jobs, but not enough of them. Trucking did not lose jobs in May. Real, unadjusted payroll numbers show a 10,800-job employment gain, but that was still a smaller increase than expected and insufficient to meet surging freight demand. According to preliminary, unadjusted data from the US Bureau of Labor Statistics (BLS), the gain in new hires during May brought the total number of actual trucking jobs added during the past three months to 25,100, according to preliminary, unadjusted data from the US Bureau of Labor Statistics (BLS). That is a sign trucking industry's effort to increase employment, and thereby capacity, by raising pay is succeeding. As of May, US for-hire trucking employment is 51,000 workers above its year-ago level. But the trucking jobs gained in May, including drivers and other workers, were still fewer than expected. The data show the BLS anticipated trucking would add about 12,700 jobs, which meant trucking fell 1,900 jobs short after seasonal adjustment. That adjustment does not mean trucking “lost” 1,900 jobs but indicates hiring numbers did not rise to meet expectations based on seasonality.
  • The Port of Long Beach currently has 12 container vessels at berth and 5 container vessels at anchor destined for POLB’s marine terminals. The average at anchor is 4.6 days.

port of long beach weekly volume

  • Some experts say the supply chain to remain backed up until 2022. According to the National Retail Federation and the Hackett Association’s Global Port Tracker, ports they monitor moved 2.15 million 20-foot equivalent units in April. The latest month's final figures are available. It marked the busiest April since NRF, and Hackett began tracking container imports in 2002. The April figure was up 33.4% year-over-year, and those results followed the 2.27 million containers in March — a record for containers imported in the 19 years the program has been in place. Supply chains find it difficult to keep up with demand as transportation capacity becomes harder and harder to come by. Several vessels are taken out of service when volumes were low remain in dry dock, while others are delayed in congested ports, which face a lack of workforce both because of COVID-19 illnesses and the tight labor market. Many people remain hesitant about returning to work, affecting ports, rail, trucking, and distribution centers.
  • The U.S. Inventory to Sales Ratio is at the lowest levels ever recorded, and the trans-Pacific shipping system is pushing up against its max-capacity ceiling. As a result, $65 billion in inventory will need to be added ahead of the 2021 holiday season to reach the inventories-to-sales ratio held in 2019.

total business inventories to sales ratio

  • Class 8 truck sales in May jump 98.4% year-over-year. Retail sales in May cleared 18,000 and trounced year-earlier levels that had plunged amid the pandemic, several independent sources reported. Sales were 18,187, an increase of 98.4% compared with 9,165 a year earlier. May posted the third-highest total this year. Year-to-date sales improved 32.2% to 91,714 compared with 69,379 a year earlier.
  • Truck cargo thefts skyrocketed during the pandemic. The numbers started to jump in the second quarter of last year. After that, there was a spike in the numbers, and it continued throughout the year. It is still too early in the year to be sure, but almost halfway through, most predict we will start to normalize, but some still feel that normalization won’t happen until 2022. CargoNet reported 1,502 total theft events for 2020. That compared with 1,106 in 2019 and 1,181 in 2018. These numbers include both cargo and vehicle thefts, which can overlap since both are stolen. Thefts specific to cargo reached 1,059 total events in 2020, compared with 758 in 2019 and 797 in 2018. Vehicle theft events reached 861 in 2020. Before that, they were 676 in 2019 and 810 in 2018.
  • FedEx Freight is shedding 1,400 lower-margin clients to protect service levels. FedEx Freight is immediately cutting service to about 1,400 LTL customers, affecting thousands of locations, to reduce terminal bottlenecks and shipping delays as unprecedented amounts of tonnage pour into the LTL sector.  Starting June 14, 2021, and until further notice, FedEx Freight will begin implementing customer-specific actions to control capacity and avoid backlogs in the most capacity-constrained freight service centers. Most LTL experts feel FedEx Freight is suspending outbound shipping to thousands of facilities operated by 1,400 customers in regions experiencing the most congestion.  Weeding out customers follows last week’s public announcement that FedEx Freight is adding a new surcharge to high-density areas, something parcel carriers frequently do to deal with volume issues.
  • Spot Market Pricing (DAT)
    • Dry Van National Average RPM @ $2.70 (down $0.01 from prior week)
      • $0.06 behind current contract rates
      • $0.90 ahead of June-2020 spot rates
    • Flatbed National Average RPM @ $3.16 (up $0.01 from prior week)
      • $0.19 ahead of current contract rates
      • $1.09 ahead of June-2020 spot rates
    • Intermodal National Average RPM @ $1.71 (up $0.03 from prior week)
      • $0.28 ahead of June-2020 spot rates
      • U.S. rail intermodal units are up for the week ending June 5. Intermodal containers and trailers, at 261,647, were up 8.1% annually and trailed the weeks ending May 29 and May 22, at 286,921 and 286,547, respectively.
  • Diesel costs continue to rise, last week ticking up to $3.274 per gallon, up another $0.02 week over week, up 3% month over month, and now up 21% year to date and now up to a 37% increase year over year.
  • FTL capacity doesn't feel as highly tight as it felt a few months ago. However, it's still tight relative to a typical environment. Specifically, TL tender acceptance rates improved to 86% last month, up from a recent low of 72% in late February and 81%-83% in April, although they remain below his target of 90%-95%. Given continued tight capacity, companies have started to move volume from FTL back to intermodal as rail service has been improving. As a result, shippers have reduced their spot market FTL business by half over the past quarter. They pay 10% spot rate premiums above their FTL contract rates, although this is down from 30%+ premiums in February and March. Finally, shippers are experiencing many LTL service issues, so they have been increasing their use of ODFL and other premium-priced LTL carriers who can offer the service. LTL capacity is particularly scarce on the West Coast and Northeast, where carriers have been embargoing traffic. As a result, shippers are seeing above-average LTL contractual rate increases this year.
  • LTL Mid-Quarter Updates this week, ARCB, ODFL, and SAIA provided mid-quarter updates. On average, for the 3, LTL tonnage/day in May increased 24% year over year vs. +30% and +9% the prior two months. LTL tonnage also decelerated on a 2-year stacked basis, with ODFL performing best, but SAIA and ARCB both decelerating. Meanwhile, yield trends continued to improve, and ARCB noted its best sequential yield increase in 10 years. ODFL's tonnage and yields were better than expected, while ARCB was mixed (better yields but weaker tonnage) and SAIA's tonnage was worse.
  • Reimagining the way goods are shipped. Newer trucks drive better customer service. There is a direct connection between a high level of customer service and a private fleet's focus on utilizing newer, cleaner, more reliable trucks that protect the environment and offer advanced safety features. According to a recent industry report on truck utilization and costs, newer trucks provide significant benefits to a fleet's bottom line. For example, fleet operators can realize a first-year per-truck savings of $16,856 when upgrading from a 2016 sleeper model-year truck to a 2021 model. For a fleet of 100 trucks that upgrades to 2021 model-year vehicles, the fleet could save up to $1.7 million.
  • LA / Long Beach, not the only issue.  At the Port of Oakland, around ten container ships anchored in San Francisco Bay, off Oakland, according to Automatic Identification System (AIS) ship-positioning data from Marine Traffic. But that’s less than half the story. Off the coast, an additional fifteen or more container ships were drifting in the Pacific.

Map view of ships anchored in San Francisco Bay

  • The number of waiting ships has a different meaning for Oakland than for Los Angeles/Long Beach, as Oakland is a much smaller port. Oakland’s January-April import throughput was about one-tenth of the combined Los Angeles/Long Beach throughput. In addition, Oakland has two berths temporarily out of commission. The ONE-operated NYK Delphinus suffered an engine room fire on May 14 and berthed in Oakland on May 18. AIS data showed the ship still at the berth on Wednesday. In addition, a berth at Oakland International Container Terminal has been unavailable for an extended period due to crane installations. That berth should come back online by the end of this month. According to carriers Maersk and Hapag-Lloyd, the bigger problem in Oakland is a shortage of available longshore labor. Maersk said in a client note last week, “Terminals are limited to two gangs per vessel on most ships due to the unavailability of the needed labor to cover the current demand.”  Hapag-Lloyd informed customers on Tuesday, “Massive import volumes combined with labor shortages are the biggest drivers of continued congestion and vessel operations delays.”
  • Forward Air July 4th Holiday Capacity Surcharge. This surcharge will be implemented as a “July 4th Holiday Capacity Surcharge” effective June 28 – July 9th (2 weeks). This 10% holiday surcharge is due to annual capacity challenges surrounding the Independence Day holiday exit LAX, ONT and ORD destined for their Northeast and Southeast regional points. They claim that they are trying to get ahead of the game rather than reactive and enforce an embargo. They also say that they realize these two weeks will be challenging from a capacity constraint being the end of the month and the end of the quarter.
  • Truck drivers are getting big pay hikes, but there’s still a shortage of drivers.  Rising pay to stay competitive Trucking companies are boosting pay to keep drivers on their payrolls. This week, Roehl put in place its second pay increase of this year, which together should increase driver pay at the company about $4,000 to $6,000 a year, or about 9% to 11%. They have to offer that additional payment to be competitive. Another truckload company, CR England, announced in April its third pay hike in the last three years, increasing its drivers' pay by more than 50% compared to 2018. The trucking companies charge higher rates to customers and take on more work when the drivers are available.  Customers, for the most part, have been very understanding that it's necessary to raise rates.  Most carriers say that they could literally hire twice the number of drivers they have now – as they have the business offerings from customers to keep them busy. The average drives say that he/she has seen his/her pay increase from about $40,000 a year a few years ago to probably $70,000 this year.
  • As expected, the California Trucking Association has filed an appeal in its setback to keep AB 5 out of the state’s trucking sector, asking a full 9th Circuit to review a recent appellate court decision. In action filed last week, the CTA asked for an en banc hearing. In an en banc action, the party appealing asks for the full circuit to hear the case, with a subset of the full circuit. The en banc request was filed last week. In the filing, the CTA returns to the key arguments it has made in its efforts to keep independent contractor law AB 5 away from the state’s trucking market. For all of 2020 and into 2021, those arguments were successful, with a temporary injunction handed down by a lower court early last year barring the implementation of AB 5 in trucking even as it began to govern and impact independent contractor relationships in other fields. (Independent gig drivers, like those at Uber, got out from under AB 5 through the passage last Election Day of Prop 22.)
  • Transportation capacity tightens further in May.  Transportation capacity diminished further in May, according to a supply chain survey. The capacity subindex of the Logistics Managers’ Index fell 50 basis points from April to 32.7%, “indicating continued downward pressure,” the Tuesday report read. The LMI is a diffusion index wherein a reading above 50% indicates expansion and a reading below 50% indicates contraction. The overall index, which is designed to capture the rate of change in areas like transportation, inventory, and warehousing, declined 3.2 percentage points to 71.3%. Nevertheless, the latest reading remains firmly in expansion territory, and only 4.4 percentage points off the all-time high. The strains of this continued growth rate are being felt most acutely on price metrics, which continue to grow at an astonishing pace. The transportation prices subindex declined 1.4 percentage points to 91.2%, but still at an elevated level indicative of a furious rate of change.
  • Union Pacific Railroad will raise surcharges on all domestic intermodal customers in California who ship more than their contractual limits from June 13. The second time UP has increased the fees after implementing them in March. The railroad will charge $3,000 per container on low-volume shippers and $1,500 per container on all other shippers, the railroad confirmed to Tuesday. Initial surcharges were $250, but UP raised them in April to $1,500 for low-volume shippers and $1,000 for all other customers shipping out of California. The latest hike is a signal UP is concerned about having enough rail-owned 53-foot containers to supply core contract customers through this peak season after falling short in several instances last year, according to conversations with intermodal marketing companies (IMCs) and shippers.
  • US truck rate inflation may extend to 2022: The US economic recovery is boiling rather than settling transportation markets — the US truckload market in particular — according to the latest quarterly forecast, the US economy is expanding at 7.9 to 9 percent in the second quarter, and that rapid growth is creating a “bullwhip effect” on supply chains.  We won’t know for sure until the end of June, but so far, all indications are pointing towards yet another record peak.

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