Ocean, trucking, and air freight rates and trends for the week of August 15, 2018.
Want to receive our weekly Market Update via email? Subscribe here!
Maersk Expects Lower-Than-Planned Earnings
Rising fuel prices, escalating trade tensions, and soft freight rates are three factors contributing to Maersk’s announcement last Tuesday that its earnings would be lower than expected. The world’s largest cargo carrier plans for core profits of $3.5bn to $4.2bn, compared to last year’s guidance of $4bn to $5bn. Analysts predict lower earnings among top operators.
Mexico’s Shipping Industry Looks to Tech to Mitigate Cargo Theft
Shippers, railroads, and truckers are looking to technology to combat rising cargo theft in Mexico, JOC reports. Advanced trace-and-track technology is used to monitor the movement of cargo and signal attacks, giving shippers notifications to alert authorities.
India’s Monsoon Season is in Effect
Monsoon season is in effect from June through October:
Peak Season Came Early This Year
U.S. import volumes are increasing ahead of the holiday retail season for a number of reasons, including:
Read the full analysis from Flexport’s VP of Ocean Freight here_. _
*Trans-Pacific Peak Season Sees Higher Rates *
U.S. importers shipping in trans-Pacific should expect higher rates, as peak season has caused very low capacity on most ships. As JOC reports, “Ocean carriers in certain cases are holding the line on weekly minimum quantity commitments (MQC) as they have done in prior periods of tight capacity, meaning that any given shipper will be allocated only one week’s worth of capacity out of its total annual MQC.”
*TPEB Services Are 3-4 Weeks Out *
TPEB services are three to four weeks out, and we recommend booking at least 14 days in advance of the cargo ready date. Carriers are continuing to announce blank sailings and canceling services, which will likely lead to a tightening of the market and an earlier onset of peak season.
Impact of New IMO ECA Regulations
The International Maritime Organization has mandated under new Emission Control Area regulations that by 2020, all merchant vessels must reduce their sulphur emissions to 0.5% from 3.5%.
Whether they upgrade their vessels or their fuel, carriers will need to undertake significant changes to comply with the new regulations, and those changes will come at a cost to shippers. Rates may climb between now and 2020 as a result.
Trade Dispute Hasn’t Yet Affected Peak Season Expectations for Air Freight
Air cargo expectations are still high for the “second half and into the end-of-year peak season” as the strong demand seen in the first six months is expected to continue. According to the JOC, volume has been steadily increasing in the east-west trades.
While trade relations may affect how goods move in the near future, there hasn’t yet been any change in consumer behavior.
Early trans-Pac Peak Means Higher Truck Rates Ahead
JOC reports that the early peak shipping season could mean earlier-than-usual rate increases for truck and intermodal shipments in the U.S. As capacity tightens and rates increase, we recommend booking shipments as early as possible.
U.S. Businesses Feel the Effects of Low Trucking Capacity
As factories ramp up production to meet the needs of the fast-growing U.S. economy, many businesses report that it’s been very difficult to find trucking capacity in the current market. This is affecting companies to the point of cutting their full-year earnings reports, as they know they won’t be able to move product as previously expected.
*U.S. Truckload Carriers Predict Even Tighter Capacity Ahead *
With no indication that freight demand is slowing down anytime soon, trucking carriers are experiencing rapid revenue growth. As a result, shippers who don’t book in advance may be out of luck when looking for capacity.
*Big Rigs Get an Update Aimed at Efficiency *
Trucks are getting “smarter” as companies upgrade to new technology. From new tires to advanced navigation and communication systems, companies are looking for avenues to improve efficiency and lower the cost to serve.
Heavy-duty trucks are leveraging the internet to pull data from trucks with the goal of improving transit times and reducing the rate and impact of human errors. While the cost of upgrades can seem high, companies report that they’re saving money in the long run.