Carriers in port cities is preparing for ‘Air Pocket’
The rejection rate of the outgoing supply of Los Angeles is only 2% compared to the national rate of rejection of the offer of 5.4%. (Graphic: Sonar)
The import volume remained strong in April, as Freightwaves described, with imports up 1.2% compared to March and 9.1% from one year to the next. In the future, a major drop in imports seems imminent, questions being severity and duration – and finally if this will result in more accelerated surface transport. (Could the truck find a share of rails?) Some of the ports expect a volume in the coming weeks from 20% to 35%, which seems reasonable depending on the data of Sonar. During and intermodal are probably among the first affected modes. Los Angeles is a freight market to monitor given its proximity to the sail with China and status as the largest port complex. This market was unusually soft with a current outgoing tender rate rate of only 2%; A lack of imports could exacerbate relaxation on the market. A positive rotation is that some carriers call it an “air pocket”, which implies that the demand will fear once the commercial transactions concluded and / or the inventories will run out.
Intermodal remains a strong value proposal for sender
The intermodal domestic containerized volume out of the (white) surpassed the volume of tenders for loading long-haul trucks. (Graphic: Sonar)
Thursday afternoon, the domestic group Hub Carrier Hub provided comments that added a context to a certain number of trends that we see in Sonar data. First, the rate difference between intermodal and loading trucks remains wide compared to historical standards – around 30% currently. I generally think of a historical spread closer to 15%. HUB was also complementary to the rail service for its Western railway partner (Union Pacific) and the rail partner Eastern (Norfolk Southern). Relative rates and service levels, combined with the traction factor that reduces sensitivity over time, explain why the intermodal volume contained in SONAR has outperformed the volume of truck tenders. Inner intermodal capacity is abundant, as measured by the availability of containers. HUB says that it has 20% to 25% of its stacked containers and could manage an additional volume of 35% before it spends capital for additional containers. The coming weeks will probably show a drop in intermodal volume due to an import pocket, but the intermodal value proposal for sender should remain strong.
The aircraft market rechures after the redesign of electronic commerce
(Sonar: dair.pvglax)
Since the start of Covid, the air cargo market has gone through a period of five years when rates were high compared to history – and raised throughout the year, not only during peak seasons. This was partially linked to the end of business trips that never recovered completely. Companies’ work routes are more aligned with the air cargo ship’s space necessary than personal travel routes.
In addition, the volume of electronic commerce with points of Chinese origin which also qualified for the exemption from Minmis has exploded in recent years. This bubble seems to have burst completely. Friday, the minimis exemption was eliminated. Now, the Chinese plots that would not have faced any price if they were sent to individuals and worth $ 800 instead of cope with a basic rate of 145% more of specific prices for products. Meanwhile, postal items are now faced at a basic rate of 120% or at flat costs of $ 100 per article (which reaches $ 200 on June 1). However, this reference rate of 145% can be found as a price of 80% – or another number.
The Chinese electronic commerce platform TEMU anticipated the end of the exemption from Minmis and has worked to move its commercial model in the past year. It is now a question of selling only items that remain in American warehouses. The articles stored are much more likely to move via the ocean. The rapid fashion seller Shein, who also used the exemption from Minmis, would have delayed the plans of a London Stock Exchange taking into account the tariff uncertainty.
This week is the Stockout Show
(Image: FWTV)
Monday, The Stockout, Grace Sharkey and I discussed the Ocean and Airfreight markets and interviewed Wiley Jones, co-founder and CEO of file.
The show has experienced a recent Sharkey article highlighting the reactions of many trade war management teams. Regarding the CPG and the retail industry in particular, which has stood out was the desire for many of these companies to undergo pressure on margins rather than rushing to increase prices. This contrasts with the behavior of GPG companies in the years that followed the start of Covid when price increases were frequent and high. Many GPG companies claim that their direct exposure to prices is limited – most CPG articles are produced at the national level and that many ingredients come at national level. But a common concern among the management teams is that the prices will contribute to the overall inflation rates, which will lead to a new drop in exchanges and kicks to the discretionary elements. Monday’s show is available on the YouTube Stockout channel.
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The southern California truck market to become more loose appeared first on Freightwaves.
