Freight Volumes Down, Space Tight

by on
Global Trade, Macroeconomics

It’s an uncertain time in the freight market. Ocean imports are down, exports are up, domestic  trucking is down in overall volume but up in intermodal as companies seek the economies of a rail/road mix at the expense of speed according to an article in Traffic World .

The problem comes from the inter related nature of the logistics market. Consumer confidence is down on the back of rising jobless figures and the housing slump. The weak US dollar has further deterred imports of goods previously flooding in from Asia and elsewhere. Because containers are not coming into the market they are not available for exports causing a domestic shortage of containers for re-export, particularly specialist refrigerated containers. In response to the falling volumes, shippers are diverting vessels to other routes and truckers are taking vehicles off the road in order to keep utilization (and hence  trucking rates) up. As transport costs have risen, global companies have begun to relocate production closer to their clients according to Proctor and Gamble quoted in the article.

Exporters are struggling to first get the containers and then having got the containers in finding space on a vessel. It is not unusual for shippers to wait 2-3 weeks for export space, not because volumes are at record levels but because equipment and space has been reduced.

The normally busy fall peak run up to Thanksgiving and Christmas (when some companies make 80% of their annual revenue) could create a major problem in the market this year. With capacity diverted elsewhere and domestic transport equally in short supply the market could face high rates, limited space and delays in spite of the volumes being lower than 2006 and 2007.

The larger trucking and logistics companies are working to make the most of a bad situation however. In the expectation that high fuel costs are here to stay, they are developing advanced collaborative planning to make the most of every vehicle journey, fitting governors on trucks to control speed, and hence reduce fuel costs, and developing more sophisticated forward planning software to map routes and distribution networks.

What was considered a temporary change in freight patterns is being increasingly treated as the new status quo and the transport industry is adjusting to what all agree will be challenging times ahead.

–Stuart Burns

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.