USA Logistics Market Update

Several economic factors have caused a significant shortage in air, land, and sea transportation capacity. According to the Logistics Managers' Index – which is based on a monthly survey of 100+ logisticians – there has been six consecutive months of decline in the overall availability of transportation capacity, with the rate of decline from October to November among the strongest ever recorded. The following is a snapshot of what this capacity shortage means for different transport sectors.

For the most up-to-date information and analysis on logistics trends, please monitor the Falcon website and social media.

Ocean Freight Capacity

Import volumes have been strong in recent months in the lead up to the holiday season and as manufacturing capacity strengthens in China. According to the US Census Bureau’s September data, US import values from China were the strongest since July 2019, while imports from Taiwan had their strongest recorded month.

This surge in volume from East Asia to the US has had multiple effects on the market. Rates have risen to record highs as available space on vessels becomes limited.  In many instances, services are either unbookable or are only accepting bookings for sailings as late as four weeks out.

The increased import demand is also causing carriers to push containers to Asia, causing shortages of available containers in regions such as Europe and the interior US. According to reporting from the Wall Street Journal, carriers have gone so far as to rush empty containers back across the Pacific from the US, leaving no available containers for US exporters – particularly inland exporters such as farmers.

Port Congestion

A number of factors including above-average import volume into the US, truck shortages, and work limitations at ports due to COVID-19 have triggered congestion at port terminals, inland ports, and rail ramps throughout the US. The most severe congestion is in Southern California, where the Port of Los Angeles/Long Beach is being inundated with a surge of import cargo from East Asia, causing longer than usual truck processing times. The lead time to pull containers off the port can be as long as 2+ weeks.

Port congestion and delays are also affecting ocean and inland ports elsewhere in the country – including Oakland, Seattle/Tacoma, New York, Baltimore, and Chicago.

Inland Freight Capacity

A nationwide trucking shortage is currently affecting all equipment types. The DAT Freight & Analytics National Load-to-Truck Ratio hit 34.38 for flatbeds the week of November 8 – meaning there were 34.38 requested loads for each available truck. The same index for vans was at 5.20 that week.

The restricted capacity – driven by surging imports and strong e-commerce demand – is pushing up pricing for all equipment types as well. According to DAT, year-over-year spot rates in November were up over 30% for vans, over 15% for flatbeds, and over 20% for refrigerated trucks. E-commerce demand in advance of the Christmas holiday this month has also led to a deterioration in available capacity.

Trucking capacity in the coming months is forecast to be further restricted by the distribution of the COVID-19 vaccine. Refrigerated trucking capacity in particular will be curtailed as tens of millions of doses of the vaccine are rushed throughout the country under strict climate-control requirements.

Intermodal rail systems have also been subject to delays as port congestion and strong import volumes cause backlogs in rail transfers at key ports.

Airfreight Congestion

The North American airfreight market has been hampered since the summer by rising demand amidst substantially reduced capacity. With US airfreight historically reliant on belly-hold cargo on passenger aircraft, the widespread reduction in passenger flights has decimated available capacity. According to data from IATA, airfreight capacity in North America was down 15% year-over-year in September, while demand climbed 8.6%.

This major shortfall in capacity has led to higher than usual rates in the airfreight sector, with the use of premium carriers and priority service levels being necessary to ensure uplift – especially on high-demand routes. Air gateways in the US are running at or near peak capacity, with wait times for airport pickups and deliveries taking longer than usual, often causing trucker waiting time.

These trends will continue until passenger flight schedules return to pre-COVID levels. The global distribution of the COVID-19 vaccine in the coming months will further limit capacity as the vaccine and accompanying medical supplies are given priority by carriers.

How is Falcon Helping Customers Cope?

Our team is staying ahead of market trends on a daily basis, which includes holding forecasting meetings with carriers and maintaining close contact with port and airport terminals to keep pulse on congestion. We are working with clients to – when possible – avoid congested ports and airports and to select routings that reduce exposure to these supply chain risks.

It is critical in these challenging times that customers communicate any transit time requirements, deadlines, and budgetary requirements in advance so our team can tailor the best possible solution for each shipment. Overall, customers should be prepared for fluctuating price points and the possibility of transit delays when major gateways are used until capacity and demand balance out.

Falcon is leveraging its nationwide network of hundreds of available trucks to keep customer supply chains moving. Customers should expect longer than usual lead times on truck dispatches while we work to ensure capacity for your freight.