This week:

  • Oakland returns to normal operations after trucker protests slow operations 
  • Tight truckload capacity leaves executives unsure of market stability 
  • Container availability in China and Asia is not an issue, unlike in the US and Europe 
  • Singapore placed at the top of the maritime shipping center index list 
  • NY-NJ container backlogs force shippers and truckers to plead with FMC for per diem waivers 

Trucking Costs and Shipment Volumes Rise as Shift to Contracts Continues

According to the US Bank, shippers spent more on trucking in the second quarter of 2022 than in the first quarter as truck freight continues to move away from the spot market toward contracts. The Northeast, in particular, experienced a 7.3% increase in truck shipments between the first and second quarters of this year and an 8.8% year-over-year increase for the second quarter, driven by strong manufacturing output. 

According to the US Bank, while many aspects of the freight market have slowed down, including a softening spot market, contract freight has remained strong. Nationwide spending on trucking rose 3.3% between the first and second quarters and 19.7% year-over-year, with the highest increases in the West and Southwest. Although rising fuel costs influence these figures, consistent demand and a growing reliance on trucking contracts are likely the main contributors.


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US Truckload Capacity Remains Tight According to Truckload Executives 

The COVID-19 pandemic saw a severe capacity shortage in the truckload market, leaving shippers scrambling to find ways to move cargo to and from ports. While the capacity shortage caused by the pandemic is now over, truckload executives and industry leaders still feel that capacity will not grow in the near future and could even shrink as uncertainty remains due to smaller truckload carriers leaving the market. 

David Jackson, CEO of the largest US truckload operator Knight-Swift, stated that the company has already seen a contraction in truckload supply. They expect this to continue as the year progresses as contraction outpaces dropping demand. While capacity in the trucking spot market is increasing, it is steadily reducing in other sectors, including the less-than-truckload market. 

Small trucking firms that leave the industry are the main drivers of the contraction, with the total number of Federal Motor Carrier Safety Administration operating authority licenses dropping by approximately 6,000 in June among small trucking firms. 

The capacity shift towards the spot market during the start and middle of the pandemic may be shifting back to favoring larger carriers now. During the pandemic, many truckers left larger firms to take advantage of premium rates on the spot market as shippers sought to overcome severe supply chain bottlenecks. With less demand on the spot market and shippers transferring to contract carriers, many drivers may now look to move back in with the larger firms, creating more uncertainty regarding how carriers will manage and distribute truckload capacity throughout their networks. 

Container Availability Not an Issue for Ports Throughout Asia 

As North America and Europe both have hundreds of thousands of shipping containers locked up throughout their supply chains, sitting on ships and in ports waiting to be loaded or at transloading and deconsolidating facilities, shippers have no issue finding empty containers throughout China and many other parts of Asia. 

In North America and Europe, the number of containers locked up in the supply chain is causing some issues for shippers and forwarders who cannot easily locate empty containers in some regions. However, softening demand for Asian imports combined with last year’s record levels of container production mean there are excessive stocks of empty containers in China and Asia not seen elsewhere in the world. 

To compare the stark differences in container availability between origin and destination, the Port of Los Angeles currently has 29,000 containers waiting for trains and an average dwell time of 7.5 days. This figure typically sat at around two days in previous years. Generally, the average time from when an importer in the US receives an empty container to when said container returns after its journey is 50% longer than at the start of the year. 

No such delays have been reported from China’s main ports and container facilities. However, there is a possibility that bottlenecks and extended dwell times throughout the US and Europe could eventually have a toll at origin. So far, at least one ship has been unable to depart from Long Beach for Asia due to a shortage of empty containers needed for the vessel’s seaworthiness, indicating that empty containers are struggling to make their way back to origin. 

Singapore Ranks as the Top Maritime Shipping Center in the World 

The latest Xinhua-Baltic International Shipping Development Centre Index has ranked Singapore as the best maritime shipping center in the world for the ninth year in a row out of a total of 47 locations. The index comes from a joint report published by the Baltic Exchange and Chinese media outlet Xinhua ranking different cities and their ports based on their vital role in the international shipping industry, the ease with which others can carry out business with them, and more. 

Singapore scored 94.88 out of 100 points thanks to the management and planning of its ports, its well-established maritime services, and the efficiency and ease of its maritime services. Singapore’s port is the second-largest in the world, handling almost 600 million tons of cargo in 2021 alone. 

Second place in the index went to London with a score of 83.04 points overall, showing a sizeable gap between first and second place, although London did place first in terms of the scale and breadth of its maritime services, such as shipbroking and maritime law, even though other aspects of the port lagged behind Singapore. 

Shippers and Truckers Ask FMC to Prevent Per Diem Charges Amid NY-NJ Backlogs 

Empty container box numbers reached crisis levels last week in the Port of New York-New Jersey, creating a scenario where both truckers and shippers are faced with additional per diem fees on import loads that cannot be retrieved due to the backlog. 

Both the Association of Bi-State Motor Carriers and the National Industrial Transportation League (NITL) have sent letters asking for per diem waivers from the Federal Maritime Commission (FMC), saying that carriers must remove more empty containers from the port if regular trucking activities are to return and if dwell times are to drop. 

The issues plaguing many ports throughout the US have been ongoing since before the pandemic, back in 2019 when Bi-State formed a stakeholder group referred to as PANYNJ, which laid out a set of recommendations to the FMC and container carriers regarding the need to perform more sweeps of empty containers to prevent backlogs and additional costs being levied onto shippers and beneficial cargo holders. 

Although the problem has not been averted, the FMC has taken an interest in the empties at the Port of New York-New Jersey and is urging three major container lines to perform more sweeps to alleviate the strain from shippers. 

Featured Photo Credit

Photo by Cedric Letsch on Unsplash

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