OPERATIONS:

Domestic

 Status: YELLOW

• Peak season is upon us. Meanwhile, capacity and labor constraints are growing and truckload pricing is setting new record highs.
• The driver shortage continues. 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 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.
• E-commerce accounted for 21% of the total U.S. economy last year. A large slice of e-commerce is expected to significantly surge going into the holiday peak season, gobbling up capacity.
• In preparation for peak season, many of our partners have taken precautions through oversize fees and regional surcharges in an effort to protect capacity in a tight market.  
• Imports will continue to bottleneck the ports as volumes increase and a lack of manpower to handle the flow.
• Demand for domestic warehouse space has climbed sharply. The national warehouse vacancy is very tight at 4.8% while space near the ports shrinks to a minuscule 1.4%.
• Last month, we presumed that FTL spot rates had plateaued because historically, truckload spot rates tend to decline in the Fall. However, 2020 and 2021 are now the exceptions. Dry van spot rates this month are up 14% year over year and Reefers and flatbeds are up 18% and 17%, respectively. All new record highs for spot market rates.sp

International

 Status: YELLOW

• Air Freight
  • The China Golden Week holiday runs from October 1 to October 7.
  • Airfreight rates out of Asia continued to climb last week as the region recovers from Typhoon Chanthu and as China’s Golden Week approaches.
  • North China: Although the PVG airport handling capability is improving and freighter and pax freighters are coming back, the market is still very constrained ex Shanghai. Airlines are still trying to clear the backlog caused by Typhoon Chanthu. Lead time from booking to uplift is approximately 4 to 6+ days or possibly more for skidded cargo.
  • South China: While supply is not increasing, demand is strong due to the end of quarter timing. Many ocean to air conversions are increasing prices.
  • Taiwan: TPEB market capacity is fully booked. For loose cartons/high-density cargo, it is possible to secure some capacity in the spot market this week, though at very elevated rates.
  • Southeast Asia: Demand for air freight is increasing significantly and rates are increasing daily as factories in Northern Vietnam run at full speed to clear backlogged orders from Q3. Ocean to air conversions are picking up as there is no available ocean space for cargo to make the cut for the U.S. holiday season.
  • COVID-19 restrictions in China and Hong Kong are continuing to limit regular air freight capacity according to The Loadstar.

• Ocean Freight
  • Congestion returns to peak severity as seen at the port area of LA/LB, where approximately 70 or more container ships are currently at anchor, awaiting berthing space. Shippers and importers continue to pay all-time high premium prices to get urgent cargo moving in time for the holiday season. Labor strains, blank sailings, and COVID-19 related disruptions to supply are expected to continue to place additional pressure on capacity in the coming months.
  • We recommend continuing to book at least 4 to 6 weeks in advance prior to CRD. Encourage your suppliers to support departures from different origin ports and consider terminating cargo at destination coastal ports to prevent intermodal delays.
  • The Ports of LA and LB announced the intent to test extended night and weekend operating hours at truck gates in an effort to reduce the backlog. The new initiative will cover the hours of 2 AM to 7 AM PDT, taking steps toward 24/7 operations.
  • Minimal relief for container shortages, rising demand, and continued disruptions in the supply chain are causing longer shipping times for containers, contributing to shortages and inefficiencies. Lloyd’s Loading List reports the situation—exacerbated by the Suez blockage and closures in China—is expected to continue well into next year.

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