Ocean, trucking, and air freight rates and trends for the week of July 18, 2018.
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The International Maritime Organization has mandated under new Emission Control Area regulations that by 2020, all merchant vessels must reduce their sulphur emissions to 0.5% from 3.5%.
Whether they upgrade their vessels or their fuel, carriers will need to undertake significant changes to comply with the new regulations, and those changes will come at a cost to shippers. Rates may climb between now and 2020 as a result.
Anxiety over trade tensions contributed to an 8.4% increase in container imports at the ports of Los Angeles and Long Beach in June, reports The Wall Street Journal. The ports are the largest U.S. gateway for seaborne trade.
This increase in volume is early, as the seasonal shipping surge typically runs from July to September.
The Suez Canal is bringing operations back to normal after multiple ship groundings and collisions. This is causing some minor delays.
Warehouse supply in the U.S. has fallen for a record 32 quarters in a row. The lowest since the dot-com boom, the diminishing warehouse availability is attributed to the rapid increase in online shopping.
The rising price of oil, which is set by the Brent Crude Oil price, has led many carriers to raise their prices. OPEC oil cuts are expected to continue through the end of 2018, with U.S. sanctions against Iran also expected to contribute to rising oil prices.
A number of carriers have announced an Emergency Bunker Surcharge (EBS), which will begin on July 1st.
Related blog post: What you need to know about the Emergency Bunker Surcharges
The trade dispute escalated has escalated, as the Trump administration said it would levy tariffs on an additional $200 billion worth of goods. These tariffs will go into effect if Beijing does not change its trade practices. The new round of tariffs would increase prices for a number of American retailers, affecting consumer goods such as electronics, tools, and housewares.
Related blog post: What the Newest Round of Tariffs Means for Consumer Goods Brands
The electronic logging device (ELD) mandate’s repercussions move far beyond the road, as air cargo providers are citing negative consequences. Higher trucking rates, delays, and even modal switches are some of the negative consequences for air cargo.
The 2017 capacity constraints for air freight aren’t forgotten in the minds of shippers and forwarders. In response to last year’s shortages and higher-than-usual rates, shippers are looking for guaranteed space throughout the year for their products, and some are looking for their own planes. Forwarders are chartering more flights to guarantee space, and reserving planes for select shippers.
The Loadstar reports that demand growth is at 4-5%, and that April, which is usually the beginning of slack season, was stronger than expected.
Related blog post: Investing in Service, Flexport to Charter its Own Aircraft
On June 26th, members of the West Coast MTO Agreement (WCMTOA) announced that the program for providing extended gate hours (PierPass 2.0) has a planned start for the fourth quarter of 2018. A Q&A on the revised OffPeak program is available here.
Drayage demand in the U.S., which has been strong in 2018, has seen a spike over the last two weeks. Demand is high for freight shipping as well, with volume up 7.1% on a year-over-year basis.
There are a number of theories regarding the cause of increased drayage demand, but the JOC reports that no one knows exactly why.
Assuming the Federal Maritime Commission approves the restructuring, the new pricing will take effect in August 2018.
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