We’re usually talking about how the ocean cargo market is on an upswing and celebrating the monumental records set at the Port of Norfolk, but this week, we’re going to take a look at some of the trends we’ve seen in the first half of 2018. From the juggernaut of e-commerce to pricing volatility and transparency we’ll take a look at some trends that everyone should be looking for.
E-Commerce is a behemoth. Capacity on all journeys has been tightened to a breaking point due to the massive uptick in popularity thanks to the convenience with which consumers can order and receive goods by shopping online. As consumers continue to demand shorter transit times and retailers push to remain competitive, these shipments will continue squeezing air freight space throughout the year. Shippers can mitigate the issues buy employing best practices for forecasting so bookings are made in advance with solid information and explanations of requirements. Communication with airlines is key in this situation as it doesn’t look like more spaces will open any time soon. Follow any changes in requirements closely and communicate those needs to your airlines frequently to reassure your customers that their cargo remains a priority.
Pricing volatility comes from scarce capacity and with the amount of cargo moving, even ocean freight is experiencing hyper market fluctuations.” If we look at Trans-Pacific Eastbound lanes, current forecasts show 8-9% growth mostly due to an influx of larger modern vessels coming online. Meanwhile, freight volume is steadily growing although “only” at a 5-6% clip.” Some expect that carriers will attempt to deflate capacity information artificially and drive prices higher, though that trend isn’t a long term solution. Flexibility is key here, as better and often cheaper spaces can be found on the spot rate market if the shipper has that ability. Flexibility of carrier is also recommended as lanes and services via alternate options can provide a cushion during peak season crunches.
Transparency is on the rise with the ELD mandate going fully into play with trucks. While the industry isn’t exactly predictable, yet, there’s more information than ever for shippers to use to their advantage and book cargo with the best rates and lanes. However, transparency comes at a cost and there are a number of inland ports, including Chicago that are experiencing a “Perfect Storm” of shortages in the trucking market. Shortages drive up costs and complicate timing for cargo, so again, we recommend flexibility and forethought as we enter the second half of 2018 (yeah, already, crazy, right?)
We at Nelson pay special attention to market factors that impact our client’s cargo and work diligently to provide innovative, cost-saving solutions to keep you on time and ahead of schedule. Let us know if we can work on a plan to mitigate your risk for delays.
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