OPERATIONS:

Domestic

 Status: YELLOW

• Fuel surcharges are on the rise. The recent increase of 4.2 cents per gallon, bringing the price to $3.713 a gallon, would normally be considered a relatively large upward move for one week. But in the volatile market of the past year, it’s just another large but common increase and is actually the smallest of the past four weeks. Per-gallon increases in the past four weeks have been 7.1, 10.9, and 8.5 cents, respectively. Combined with the latest increase, it has put the DOE/EIA price up 30.7 cents a gallon, rising from $3.406 a gallon on Sept. 27.
• Lingering problems surrounding the ports of Los Angeles and Long Beach continue to cause negative downstream impacts on domestic surface transportation. Both spot and contract rates from these markets are at record-shattering all-time highs. 
• The driver shortage continues to surge during peak season. The lack of qualified drivers entering the industry paired with a large portion of the workforce closing in on retirement will continue to be a major concern across the industry. This ongoing issue has only intensified by the coronavirus pandemic as employers attempt to lure laborers back to work. The industry continues to find ways to attract drivers while the shippers and warehouse operations struggle to hire material handlers to keep the cycle flowing.
• Peak season is here. We spoke about this last month, numerous carriers have taken precautions through oversize fees and regional surcharges in an effort to protect capacity.    
• Last month we reported that warehouse demand for the domestic space has climbed sharply and the national warehouse vacancy is very tight at 4.8%. Industrial warehouse vacancies surged to a record 3.2% while asking prices are at all-time highs. Prime warehouse space near the ports of Long Beach and Los Angeles has shrunk even more to microscopic levels.
• In September, we presumed that FTL spot rates had plateaued because historically, truckload spot rates tend to decline in the Fall. While 2020 and 2021 are the exceptions, seasonality did finally make a brief appearance last week as load-to-truck ratios started their downward trend.

International

 Status: YELLOW

• Air Freight

  • Transpacific air freight charters hit $2 million. The cost of missing online shopping or Christmas deadlines is mounting for air cargo shippers forced out of the congested ocean markets.

  • Some carriers are beginning to impose a General Rate Increase (GRI) on the base rate of all the Block Space Agreements for transpacific routes, effective November 15 until the end of the contractual period.

  • Due to the increase in demand, transpacific eastbound rates have begun increasing. Shanghai airport is still experiencing some operational handling issues which will likely impact peak volume.

  • Demand and rates ex-South China continue to increase for transpacific eastbound lanes. HKG-US capacity is full with ocean conversions still prevalent in the market.

  • The Taiwan market is tight with strong demand in November. Standard service on transpacific eastbound lanes is full into November. Expect booking delays of around 5 to 7 days.

  • The BKK (Bangkok, Thailand) market situation continues to be very tight with some carriers only able to accept palletized cargo to LAX/JFK into mid-November. Loose cartons are preferable in the market. FEWB rates have increased as many of the airlines are overbooked and the remaining capacity is very limited. Terminal operations ex-Northern Vietnam are extremely congested due to the high amount of air volume. All the airlines are overbooked, especially to ATL, JFK, and FRA. TPEB rates remain at similar levels to the previous week. We recommend placing bookings at least a week in advance.

  • LAX/ORD/JFK ground handlers continue to face large backlogs and are using off-airport facilities to manage the flood of inbound cargo, which has a trickle-down effect on the export side. Many have shortened their free time for storage, and have implemented new, earlier closeouts for exports to accommodate longer throughput times and screening requirements.

• Ocean Freight

  • China’s October Golden Week, Christmas, and Chinese New Year will keep a stronghold on the demand for container shipping for the last quarter of 2021. Service delays are expected to create challenging conditions for service schedules and their reliability.

  • The premium and extra loader market have softened due to dips in demand for the most expensive space on transpacific eastbound. Whether rates will continue to flatten, further reduce, or even increase remains unclear. Carriers have indicated that the demand outlook remains strong through the end of the year. This is in line with projections by economists, indicating strong forecasts until inventories replenish. Congestion is expected to remain severe.

  • Terminal congestion along the US East Coast is now impacting vessel schedules with some lines canceling Savannah calls and replacing them with Charleston or Jacksonville. Congestion at LAX/LGB is also causing lines to now omit both ports and impacting schedules.

  • Space remains a challenge as global congestion results in omissions and altered sailing schedules. LAX/LGB and Savannah are of the greatest concern for the Indian Subcontinent market. Shipping lines have been repositioning empty containers like never before. 215,000 containers were repositioned in the first 8 months of 2021 into India to support economic growth.

  • Vessel arrivals and available capacity remain fluid for US West Coast POLs. USEC capacity has been more readily available. Deteriorating schedule integrity in addition to creating void sailings and delays is creating significant challenges with posted earliest return dates and vessel cut-offs at the port.

  • As congestion at the dual ports of Los Angeles and Long Beach continues to worsen, the port administrators, alongside the federal government have announced the dual ports will begin assessing an “emergency fee.” The effective date of this new fee is November 1, 2021 and applies to all containers that have been dwelling over an extended period.

  • Continue to book well in advance (at least 4 to 6 weeks) from CRD to target ETD for the best chance of hitting timelines.

IT :

 Status: GREEN

• The current challenges in the business environment create the perfect opportunity for learning. Pegasus strives to have a culture of continuous improvement which has led us to go through our Business Continuity Plan (BCP) and improve our plan. Click the link below to read our article on what makes the Pegasus BCP exceptional.

  • BCP Blog

STATUS KEY:

RED: Selective lanes not moving, driver/labor shortages, regulatory shutdowns, geographic hotspots, border closures

YELLOW: Freight is moving with less capacity, increased expense, reduced handling, with potential risk of future unknowns

GREEN: Freight is moving with no abnormalities

For questions, please email info@pegasuslogistics.com