Freight Market Update | Week 35
US Domestic Trucking
9-week decline in DOE/EIA diesel price ends on big jump. The benchmark Department of Energy/Energy Information Administration diesel price moved up Monday after a nine-week run of decreases. Compared to recent gains in the price of ultra low sulfur diesel on futures and wholesale markets, the increase of 20.6 cents a gallon to $5.115 seems almost puny. For example, since a settlement Aug. 15 of $3.4403 per gallon, ULSD on the CME commodity exchange, through Friday’s settlement of $4.0076 a gallon, increased by more than 56.7 cents a gallon. Even with a 20-cent-plus increase, the higher number was just the fourth-largest weekly increase in the volatile market that began with the lead-up to Russia’s invasion of Ukraine. But after nine weeks of declines that totaled more than 90 cents, a more than 20 cents reversal in one week is significant.
A ‘Great Purge’ is pushing small truckers out of business at an unprecedented rate. In May, net motor carrier revocations hit a record high, according to an analysis of federal data by FTR Transportation Intelligence. January and March of this year were the previous records. Small fleets as tiny as one driver comprise the bulk of these shuttering trucking companies. Avery Vise, who is the vice president of trucking at FTR, said many of these drivers will join larger fleets rather than get flushed out of the market completely.
Air Freight
The air cargo market remains flat as the industry heads towards the traditional peak season. Data provider TAC Index said that its latest figures showed that overall airfreight rates according to the Baltic Exchange Index (BAI) were last week down 0.8% compared with the prior seven days. “Prices did not move much from most major outbound locations, with Shanghai showing the biggest gain (against a week before) of 2.4% taking the year-on-year change from there to 13%.” The data firm said that with inventories high and China still not fully re-opened from Covid lockdowns, it had been predicted that other countries in Asia Pacific would report an increase in rates. However, prices from Vietnam to the US saw a fall of 6.3% leaving the year-on-year change at 24.6% and India to the US prices were down 14.7% compared with the previous week and are down 9.8% against last year
Ocean Freight
130 container vessels still sit off North American ports, just 27% off West Coast. Only 8 ships waiting off Southern California, but 41 off Savannah. “The last day we had eight container ships [waiting off Los Angeles/Long Beach] was Nov. 15, 2020, in the early days of the backup,” said Kip Louttit, executive director of the Marine Exchange of Southern California. The norm before the pandemic was for no ships, or at most one, to be waiting. The queue first began to climb in October 2020. The number of ships off Los Angeles and Long Beach hit an all-time high of 109 on Jan. 9. At this time last year, there were 48 container vessels waiting offshore, almost six times more than there are now. Although conditions off the shores of Southern California are approaching pre-COVID normality, conditions at the terminals are not. Landside conditions are improved versus the peak, but the numbers are still unusually high.
As of Monday, there were 50,176 empty containers at the Port of Los Angeles. That’s well below a short-lived spike to 90,397 in late November, but it’s same number of empties as in late February. There were 66,467 loaded import containers at the port’s terminals, down from June and late October 2021 but still on par with levels in late November. Of the total, 31,150 were waiting to load on railcars. Normally, there would be around 9,000. There were 20,710 rail-bound containers that had been waiting nine or more days. Normally, none would dwell that long.
