Recon Logistics - Freight Advisors

Recon Market Update - September 27, 2021

Posted by Hank Newman on Sep 27, 2021 9:12:05 AM
This week is the last week of the quarter and you know what that means.  Expect more than normal disruption and late deliveries.
Many of us are focused on the issues we are seeing within the US - namely tight TL capacity, high rates, and awful LTL carrier performance.  One of the root causes of this is about to get much worse as weUpdate hand writing with a blue mark on a transparent board head into the busy holiday retail season.  Below are a few articles and a snippet from Swan Leap which puts the container ship crisis into some context for you to review.  
When it starts hitting the major news outlets vs. just the supply chain digests, you know it's bad!
From Swan Leap:
California's Container Cargo Crisis

Port backups have become so commonplace that it's hard to pay attention. But the combination of a looming peak season and a 40% spike in retail imports over the last month should make us pay attention. This development is going to affect everyone who needs over the road capacity between now and the end of the year. Especially when you remember that, in a pre-COVID19 world, the number of vessels anchored in the water with no place to dock was zero.

Just how much cargo is parked off the coast of California and what does that mean for OTR (over the road) capacity?

Let's start with the ships. There have been between 60-70 ships at anchor off the coast of California for the last week. Each of those ships can haul 5,700 TEUs (twenty-foot equivalent units) give or take. That means each ship is carrying enough cargo to fill about 2,600 forty-eight foot trucks. So if no more new ships make their way to LA (which isn't going to happen) it would take 182,000 trucks to move all those goods.

Under current conditions, the Ports of LA/LB (Long Beach) are unloading about 15 container ships per day (or 39,000 trucks worth of cargo per day). At that rate, and assuming the market has enough capacity, each port would need 4 days to clear the backlog. There's one major problem with that math. On average, US markets are only moving 16,000 loads per day over the road. Now, not every load coming from the West Coast moves over the road. Until recently, a lot of those loads were moving via rail. But the sheer volume of cargo moving into the US presents a major challenge.

Take a look at LTL Carrier Performance going into the 4th quarter last year.  Could we see another dip to even lower levels?  Let's hope not, but let's also be prepared!

LTL Carrier Performance-1


Tags: Freight Class, Accessorials, LTL, Freight Rates, LTL Carrier Cost, Rules Tariff, Logistics, LTL Service, Limited Access, Freight Technology, TMS, Freight Insurance, Freight Claims, Freight News, Freight Update

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