Congestion, spot rates and more ocean price increases.

Intermodal congestion in Southern California climbed to unprecedented levels in recent days as equipment shortages, workforce reductions, and with more demand for ocean imports from Asia via the U.S. West Coast causes another cargo delay on top of this. In the last week, UP added a $500 and a $1500 surcharge effective August 17th. As volumes increase 38% for UP and 21.8% for BNSF since April, the industry faces increasing issues from the forecasted reaction to the COVID-19 shutdown.

Truck spot rates have risen $1.00 – $1.40 per mile from California marking the first time in history that truck rates are lower than rail due to the fast-rising trans-Pacific ocean spot rates. We in the logistics industry face continually climbing prices as demand keeps outpacing all supply on the market because shoppers haven’t taken a break from buying. Some of that supply was removed to soak up excess capacity for an expected drop in the demand that never happened.

Smaller workforces at U.S. warehouses and distributors plague supply chains with staff being furloughed or laid off to meet the expected but non-existent drop in demand and reinforce socially distanced zones. Fewer people now go to stores to shop and are choosing online shopping so there is no relief for excess inventory, and nowhere for new cargo to go so it ends up sitting in containers waiting for unloading, sitting on a chassis, taking euqipment out of the market.

Even contract rates are being subject to surcharges by way of graduated rate increases and equipment is scarce unless you are working with a container pool, as Nelson does. Call your Nelson International representative and find out what our professional team can provide for you during this unprecedented time.