Imports will continue to drive strong trucking volumes through September
According to the FreightWaves Ocean TEU Volume Index, bookings of U.S. imports from China are up 89% year-over-year (y/y) through next week, which is a good indication that freight volumes will continue to flow through the rest of September.
FreightWaves’ Greg Miller reported ocean shipping rates broke records, with 40-foot container rates eclipsing $3,700 in the spot market from China to the U.S. West Coast last week.
During the early days of the coronavirus pandemic, many ocean shipping companies reduced their capacity. Trans-Pacific carriers are now returning their services to full strength and increasing rates in response to new shipper demand. This trend bodes well for domestic freight carriers.
With the U.S. industrial sector slowly reemerging from the pandemic, the domestic freight market has been driven by a strong flow of imports from Asia over the past few months.
China remains the nation’s largest maritime import market by a wide margin, although there was a slight reversal in this activity during 2019 due to trade tensions between the two countries.
Most containerized freight coming from northern Asia still enters the U.S. through the southern California ports of Los Angeles and Long Beach, maintaining their status as the largest port complex in the country.
With Los Angeles remaining the largest recipient of trans-Pacific cargoes, southern California has become one of the tightest truck markets in the country.
All-in dry-van spot rates in the highly liquid Los Angeles-to-Dallas lane have climbed steadily from $1.12/mile in April to $3.04/mile by the first week of September, according to Truckstop.com. FreightWaves Outbound Tender Rejection Index (OTRI) showed an increase from 1.2% to 27% over the same period.
Other parts of the country are also experiencing tightening truck capacity. Spot rates from another benchmark lane, Chicago-to-Atlanta, have jumped from $2.14/mile to $2.93/mile over the past month, with tender rejection rates for Chicago climbing from 13.6% to 20% during the same period.
Unlike 2019, where many imports entered the country and sat in warehouses, this freight is moving throughout the U.S. as demand for certain products has jumped due to consumer lifestyle changes.
Electronic and household goods continue to experience double-digit growth as Americans spend more time at home due to COVID-19. Athleisure has replaced business casual on the apparel front. These pandemic-induced consumer trends will continue to shake up U.S. importer inventories in the months ahead.
The bookings illustrated in the Ocean TEU Volume Index are orders that have expected departure dates over the next seven days. For shipments to the U.S. West Coast there will be a two- to three-week transit time before it hits the ports. This means that freight will not be on a truck until late September earliest. The index has shown consistent year-over-year growth during the past few weeks, meaning that the flow of freight will not stop from the international side.
Source: freightwaves.com/news/
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