Arrive Logistics’ Post

Container forward rates nosedive amid signs of peak season ending early

The final week of February brought additional negative developments. Refrigerated spot rates continued their decline for the sixth consecutive week, now resting at a dismal $2.34 per mile, mirroring rates from July 2023 (Week 30). Compared to the same period in 2023, rates are down by an average of 13 cents, with the Midwest region experiencing the most significant decrease of 24 cents. All regions saw a drop in rates, with the Midwest, East, and North regions taking the hardest hit and experiencing decreases of 6-8 cents on average compared to Week 8 and 18-20 cents compared to Week 7. Additionally, spot posted refrigerated volumes experienced a substantial decline, marking the second-lowest level recorded since our data collection began. The Market Power Index (MPI), which assesses market conditions and strength, lost one point compared to week 8 and gave a rating of 8 out of 100 for the preceding week, signaling that we're still at the bottom. We are now officially in the slow period of the year, and further rate declines are anticipated until the month's end. Concerningly, rates and volumes from the previous week were expected to continue their downward trend, but unfavorable weather and snow on the West Coast contributed to minimal resistance, preventing a more significant decline in average rates and posted volumes. NOTE: Please be aware that the Heat Map is still in development. Despite this, we've opted to share it. However, exercise caution as it has not been fully approved and may not be entirely accurate, as some data is still missing. . . . . . #freight #rates #logistics #reefer #marketreport #data #trucking #dispatch #broker #reefer53

In 2024, shipping delays may result from wildfires, rains, and droughts, and agricultural commodities could experience shortages due to various factors, including weather conditions. This article by Supply Chain Dive talks about how extreme weather could be 2024’s top supply chain risk and much more. Read the full article by clicking on the link below. https://lnkd.in/dANXce-H #riskmanagement #sustainability #P2P #automation #procurement #purchasing

More trucking companies and brokers going out of business, spot market rates continue to drop, contracted outbound rejection rates remain about the same, no suggestion of contracted freight moving to the spot market, and high numbers of logistic professionals being laid off. 🚛 📰 🖥 #logistics #supplychain #transportation #trucking #truckingindustry #carriers #broker #3pl #freightbroker #freight #shippers #shipping #construction #mining #builders #oilandgas #foodandbeverage #manufacturing #sba #mbe #vbe #veteranownedbusiness #ftl #ltl #hotshot #oversizeload #specialized #flatbed #reefer #temperaturecontrol #van #truckdriver #entrepreneur #dataanalytics #dat #cargotheft #cargotheftprevention #doublebrokering #truckingindustrytrends #industrytrends

In periods of high volatility, the spread between the market low and market high increases. Take spot rates from the Far East to the US East Coast. When the market spiked earlier this year following outbreak of conflict in the Red Sea, the average spot rate increased from USD 3 840 per FEU on 14 January to USD 5 660 on 15 January. This spike was mainly driven by the upper end of the market, with the market mid-high (representing the 75th percentile of the market) increasing by USD 2 550 per FEU and the market high (representing the 97.5th percentile of the market) increasing by USD 2 420. In contrast, the market low (representing the 2.5th of the market) fell marginally by 1%. This resulted in the spread between the market low and the market high more than doubling on 15 January to USD 4 540. A similar situation occurred when the market began its latest rally, with the market average increasing by 22.3% between 30 April and 1 May, while the market low remained relatively flat at +1.5%. Learn more about spread narrowing in July and why we see such notable differences in terms of the development of market spreads. https://lnkd.in/enTuDRCv #marketspread #marketlow #markethigh #redsea

Everstream Analytics "attached a risk score of 100% to the possibility of extreme weather causing supply chain disruption". Making extreme weather the top predicted disruptor of supply chains in 2024. #supplychain #supplychainmanagement #logistics #trucking #broker #freight #freightforwarding

Demand remains resilient All three of the primary aggregated freight demand indicators from SONAR are showing positive annualized growth rates. Maritime bookings (IOTI), trucking tenders (OTVI) and loaded intermodal rail containers (ORAILL) are trending higher heading into what is considered a stronger time of year for shipping activity. While it may not feel like it to transportation providers due to the overabundance of capacity, demand has sustained at higher levels than many anticipated. Inventory levels may be one of the strongest determining forces behind the annualized growth figures, but those numbers also suggest that consumption has not entirely waned to pre-pandemic levels. The total business-sales-to-inventory ratio collected by the Census Bureau was about 2% lower than February 2019 levels this past winter, indicating that inventories are now tighter than they were prior to the pandemic. There are still questions around the sustainability of demand as inflation remains sticky and the Fed’s rate policy continues to be restrictive, but for now there are no signs of demand deteriorating. FreightWaves SONAR

"Notably, Summer-24 delivery prices are now at a 47% discount versus 6-months ago at the height of Summer-23 (see chart at https://lnkd.in/eRQFgXFD). The cold spell is on its way out – with the prospect of higher temperatures overnight and a weekend of milder, windier conditions, no doubt exerting bearish pressure on prices to start next week. Demand has fallen to its lowest levels since the start of the week against a backdrop of improving weather and Norwegian flows comfortably above the 5-day average. Nonetheless, near-term delivery prices have closed the day marginally firmer versus yesterday’s close. Geo-political risk persists in the form of Middle East escalations and lingering worries over suppy disruption via the Red Sea. Monthly Day-Ahead averages are on target this month to achieve 79p/therm (or 2.7p/kwh)..." To read more, please head over to our Market Insights for a 1-minute summary of markets drivers/price action. https://lnkd.in/eRQFgXFD

It's Groundhog Day. Again. The perfect storm, if you will. Drewry’s World Container Index surged by 16% maintaining the impressive momentum seen throughout May and propelling freight rates back towards pre-COVID highs. Several factors have contributed to these increases which have led to a significant spike in rates on the majority of trade routes - some levels not witnessed since September 2022. Here are just some of the reasons, which combined together, result in increased freight rates and increased costs to the end consignee: 🛳 Red Sea vessel rerouting 📈 Robust demand across various regions (unseasonal) ⏰ Increase congestion and turnaround times at ports resulting in loss of capacity 📦 Container shortages 🌀 Adverse weather conditions This boom isn't just limited to certain routes; it's spreading its strength across Latin America, Africa, and intra-Asia. We are also feeling the pressure on cargo moving to Australia. According to Lars Jensen, founder of Vespucci Maritime, this surge is reminiscent of the extreme increases seen during the COVID era, emphasising the market's return to pandemic-level dynamics. Analysts have drawn parallels to the 2021/2022 period, highlighting familiar patterns that are leading to record spot rates. Some carriers are, once again, in the spotlight for preferencing to carry higher paying spot cargo over contracted volumes. This is, understandably, infuriating many customers with contract rates. Freight rates are cyclical and are changing rapidly within two-week windows. It is always a good idea to build a tolerance into costings to accommodate for these rapid fluctuations. Link in comments!

In the past few weeks, I’ve noticed various articles and posts regarding very marginal tightening in carrier capacity vs freight demand (despite a relatively weak April-May). I am cautiously optimistic that equilibrium between carrier capacity and freight demand is slowly progressing to fruition. (I’m also hopeful as H2 was my prediction of “equilibrium” in my 2024 E3 written last year (everyone likes to be right and rarely wrong, I’m no exception)) For the bulk (food, feed) commodities segment, late June, early July tightening is normal seasonality due to capacity “going to the fields” to support harvests. This is also true of bulk aggregate commodities as summertime is peak construction season. For the summer, the determiner will be van and “refer” (segments) as to whether an equilibrium is indeed being reached between carrier capacity and demand. My personal axiom is freight downturns begin and end with van, refrigerated. Consumer spending, demand may not be the only component of the economy, but it is certainly an important driver of it. The amount of freight in motion in van, refrigerated does reflect consumer sentiment. However, in this case, equilibrium is a result of carrier attrition not a noteworthy uptick in consumer demand. So, for most carriers, it will be a period of shoring up cash, refining key performance indicators, and cleaning up the balance sheet once equilibrium is realized. It will not be a time to break out the champagne, double fleet sizes, and increase non-trucking overhead.