Logistics Market Update October 2024
Logistics Market Update October 2024
Monthly Highlights
East Coast Port Strike: What to Know
A potential strike by dockworkers on the US East and Gulf Coasts loomed large in September, creating concern throughout October. While a three-day strike did ovvur, a temporary agreement has been reached, pushing back further action until January 2024. This provides some short term relief but leaves uncertainty for the future.
Source: https://www.cbsnews.com/news/east-coast-port-strike-what-to-know/
Milton Threatens Ripple Effects Across Global Supply Chains
Hurricane Milton made landfall in Florida in early October, causing significant disruptions to supply chains in the region. Port Tampa Bay closures led to congestion at alternate ports, with dwell times increasing by 25%. Damage to Florida’s citrus industry is estimated to result in crop losses of 30% and price increases of 15-20%. Additionally, expect shipment delays of 3-5 days due to road closures.
Source: https://www.freightwaves.com/news/milton-threatens-ripple-effects-across-global-supply-chains
Air Cargo Demand Up Again in September but Growth Narrows
As we enter the final quarter of 2024, strong demand for both ocean and air freight persists across major markets. Airlines are adjusting demand for both ocean and airfreight persists across major markets. Airlines are adjusting schedules for the peak season, with global air cargo supply increasing by just 3% compared to last year, marking the slowest growth this year. However, the average global spot rate for air cargo has seen a significant increase, reaching $2.71 per kg in September – the fourth month in a row with double-digit growth.
Source: https://www.aircargonews.net/airlines/air-cargo-demand-up-again-in-september-but-growth-narrows/
Key Takeaways
- The recent East and Gulf Coast port strike led to backlogs that are expected to take 3-4 weeks to clear. Shippers rerouted freight to other ports, further increasing congestion, with container dwell times rising by 15%. East Coast container linehaul rates also climbed by 8% during the strike.
- While the Transportation Utilization Index indicates slower expansion in overall logistics activity, tight capacity remains a challenge, particularly for flatbed and reefer carriers impacted by Hurricane Milton. While the Transportation Capacity Index remained flat in October, the flatbed load-to-truck ratio increased by 54% year-over-year highlighting the demand in this segment.
- In preparation for the holiday season, warehouse prices have surged as retailers look to secure storage space. This comes despite a 6.6% year-over-year drop in overall freight expenditures, driven by a 4% decrease in diesel prices.
- The Transportation Utilization Index suggests weaker freight volumes, down 5.2% year-over-year. Ocean freight rates continue to fluctuate depending on the route. While some routes experienced declines due to decreased demand, East Coast routes saw a temporary increase during the strike.
Ocean Freight Market Update
- Container freight rates on major trade routes continued to fall significantly in September 2024. This decline was initially driven by a combination of factors. The demand for container shipping services decreased on several key trade routes, leading to a surplus of capacity. The addition of extra loaders and rerouting around the Cape of Good Hope helped to increase capacity, further contributing to the decline in rates.
- The looming threat of a strike at US East and Gulf Coast ports continued to create uncertainty in the market. While the strike was ultimately averted after three days, the mere threat of it has a significant impact on shipping rates and supply chain operations. Shippers and carriers were forced to adjust their plans and strategies in anticipation of potential disruptions.
- The balance between capacity and demand remained a key factor influencing rates. While additional capacity was added through rerouting and extra loaders, strong demand on some routes contributed to fluctuations in raates. The overall trend was one of declining rates, but there were some exceptions where demand outpaced supply.
- With the peak season arrival window closing and capacity increasing, shipping rates to North Europe and the Mediterranean have decreased, while rates to the West Coast are showing mixed trends due to a potential strike and increased competition.
Global Schedule Reliability
Schedule reliability increased by 1.2 points monthly to 60%, in July 2024.
Air Freight Updates
- The peak season, driven by the holiday shopping period, has led to increased demand for air freight services, resulting in higher rates and potential capacity constraints.
- Airlines are facing challenges in securing additional capacity due to various factors, including aircraft shortages and maintenance issues, further exacerbated the capacity and contributed to higher rates.
- Events like Hurricane Milto and geopolitical tensions in certain regions have disrupted air cargo operations, leading to delays and increased costs.
- The consistent growth of e-commerce has lead to higher demand for air freight, especially for cross-border shipments.
Freight Market and Amazon News
Amazon’s Air Freight Expansion
Amazon has been aggressively expanding its air cargo network, adding to new routes and increasing its fleet of dedicated aircraft, allowing Amazon to offer faster delivery times and increased capacity to third-party sellers.
Source: https://www.freightwaves.com/news/amazon-airline-sells-excess-cargo-capacity-to-third-party-shippers
Alibaba’s New Singles Day Focus
Alibaba’s annual Singles’ Day shopping event saw record-breaking sales, demonstrating strong consumer demand in China, highlightingthe importance of e-commerce, and the impact it has on global logistics and supply chain operations.
Amazon AI Delivery Technology
Amazon is deploying AI-Powered delivery vans that use computer vision to streamline package identification and delivery, improving efficiency and reducing delivery times.
Source: https://www.supplychaindive.com/news/amazon-ai-delivery-technology-vapr/730138/
Forceget Supply Chain Provider is a leading NVOCC licensed global logistics company that specializes in parcel, air and ocean shipping. With offices in key locations such as the USA, China, Hong Kong, Turkey, Israel and Colombia, we are well-positioned to assist you with all your logistics and brokerage needs, no matter where you are located. We take care of all the complexities of international shipping, allowing you to focus on what you do best – competing in your local market. Additionally, we pride ourselves on being the number one Amazon FBA focused freight forwarder, ensuring that your products are delivered to Amazon warehouses in a timely and cost-effective manner. With Forceget, you can have peace of mind knowing that your global logistics needs are in expert hands.