Importers have been busy “front-loading” within the first half of the yr, ordering as a lot stock as potential prematurely to keep away from the availability chain delays that brought on many delivery containers to reach properly previous their due date. This contributed to bloated retailer inventories that had been transferring items from warehouse to warehouse, looking for a house for late post-season imports. Warehouse stock ranges are nonetheless very excessive leading to congestion and rising chassis and container dwell instances at delivery warehouses.
However as a result of stock ranges aren’t turning as quick as they did a yr in the past, shippers additionally lack the house to absorb extra stock. In a latest Journal of Commerce (JOC) article, an attire and footwear shipper mentioned, “warehouses are full as a result of big-box retailers will not be taking the stock amid slowing gross sales. They got here to us at the very least 30 days in the past and mentioned we’d prefer to take our orders, however we are able to’t take them now as a result of we don’t have the house. In contrast to final yr when inadequate labor was the largest impediment, this yr it’s house.”
In keeping with Dr. Zac Rogers, Assistant Professor at Colorado State College in Provide Chain Administration, “warehousing is simply as unhealthy one step away from the ports because it was all by means of final yr. And till we work by means of all that further stock, we’re nonetheless not going to see the optimum throughput we’re used to. We’ll work by means of plenty of the surplus we’ve got this yr in stock.”
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What does the second half of 2022 seem like for importers and provide chains on the whole?
In keeping with IHS Market PIERS, containerized import volumes elevated 2% in June, which is the second-highest on report. That’s round 8% greater than the earlier yr, and in response to Nationwide Retail Federation (NRF) Vice President for Provide Chain and Customs Coverage Jonathan Gold, “Cargo quantity is anticipated to stay excessive as we head into the height delivery season, and it’s important that each one ports proceed to function with minimal disruption. Provide chain challenges will proceed all through the rest of the yr. It’s notably vital that labor and administration at West Coast ports stay on the bargaining desk and attain an settlement.”
New York ports took the honors in June with the very best variety of containers imported, representing a 19% y/y enhance following June’s 6% enhance. Importers have more and more been shifting extra quantity to the East Coast, the place volumes in June had been up 12% y/y in comparison with the 5% y/y enhance on the West Coast. Gulf Coast ports, together with Houston and Cellular, AL, have additionally benefited from the shift away from the West Coast – June volumes had been up 9% y/y.
Can we anticipate to see extra anchored ships making headlines once more?
Within the Southeast, vessel congestion has not too long ago worsened in Savannah, GA, the place 37 vessels queued up ready at anchor for an unloading berth to change into accessible. This compares to only 24 in Los Angeles, the place decrease container volumes final month within the Ports of Los Angeles and Lengthy Seashore translated into decrease truckload load put up volumes within the first two weeks of July. Load put up volumes in Los Angeles had been down 23% m/m leading to outbound spot charges dropping for the third week by $0.03/mile to a market common of $2.22/mile. The alternative was the case on the intermodal-heavy Los Angeles to Chicago lane, the place spot charges elevated by $0.17/mile above the June common to $1.85/mile or $0.86/mile decrease than the earlier yr
What does all of this imply for truckload carriers?
For truckload carriers, this implies a repeat of 2021, when vessel congestion and surging import volumes at our largest ports made headlines. This pushed appreciable freight quantity into the spot market as intermodal and contract truckload capability overwhelmed container quantity. We anticipate this to happen once more this yr however extra on the East Coast based mostly on present traits.