We realize we have been remiss in our blog-o-sphere of posts. Please, let us make amends now.
Most of you are very well versed in the ups and downs happening not only in the economy but also in the shipping industry. Rates and services have been changing more often than Lady Gaga's outfits at this years VMAs. As such, it has been difficult for most shippers to stay on top of what is about to impact their business and their budgets. We have sent several updates regarding market changes like rate increases, equipment constraints and much more. And now it's time for the million dollar question: What's next? To best answer this, let's take a quick look back at what has happened since 2008.
The Roller Coaster Began
The market dropped, and shortly there after ocean freight rates followed suit. Ocean carriers, in an effort to compensate for the loss in profit began to idle ships, scrap containers, and cancel new orders.
Trucking companies were also impacted. An estimated 3000 US trucking companies went out of business in 2009.
Once More We Climb
Starting in mid 2009 ocean carriers collectively raised freight rates at a dizzying pace. Finally in mid 2010, after a second Peak Season Surcharge was issued by a majority of carriers, ocean rates seemed to have plateaued. Carriers began to reinstate idled ships to address the boom in demand, and began placing new orders for ships and containers.
Because of the shortage of trucks available, we have seen an equally impressive increase in trucking rates as well. Many of the domestic truck rates have been changing on a weekly basis. While these rates are still unstable, the rapid rise in rates has been replaced by more moderate increases.
What's On the Other Side
As we near the end of the peak season, demand has started to drop off again. In anticipation of further reductions during the 4th quarter, carriers are planning to idle between 600,000 and 1M TEU's (roughly 85 to 145 vessels). While this volume of idled capacity isn't quite what we experienced in 2009/early 2010 (approximately 500 ships were idled), the removal of ships from service rotations will yet again decrease space available to shippers. Carriers are hopeful this decrease in vessels will help sustain carriers through the slow winter months. The idled vessels may also have an impact on the capacity available at the start of the 1st Quarter, especially when shippers scramble to have their products shipped before the Chinese Lunar New Year.
As additional changes in the marketplace occur, we will continue to send you alerts and updates of situations that may impact your business both now and in the future.
For more information, please contact our customer service department at customer@jmcgl.com or call us at 866.414.7505
Most of you are very well versed in the ups and downs happening not only in the economy but also in the shipping industry. Rates and services have been changing more often than Lady Gaga's outfits at this years VMAs. As such, it has been difficult for most shippers to stay on top of what is about to impact their business and their budgets. We have sent several updates regarding market changes like rate increases, equipment constraints and much more. And now it's time for the million dollar question: What's next? To best answer this, let's take a quick look back at what has happened since 2008.
The Roller Coaster Began
The market dropped, and shortly there after ocean freight rates followed suit. Ocean carriers, in an effort to compensate for the loss in profit began to idle ships, scrap containers, and cancel new orders.
Trucking companies were also impacted. An estimated 3000 US trucking companies went out of business in 2009.
Once More We Climb
Starting in mid 2009 ocean carriers collectively raised freight rates at a dizzying pace. Finally in mid 2010, after a second Peak Season Surcharge was issued by a majority of carriers, ocean rates seemed to have plateaued. Carriers began to reinstate idled ships to address the boom in demand, and began placing new orders for ships and containers.
Because of the shortage of trucks available, we have seen an equally impressive increase in trucking rates as well. Many of the domestic truck rates have been changing on a weekly basis. While these rates are still unstable, the rapid rise in rates has been replaced by more moderate increases.
What's On the Other Side
As we near the end of the peak season, demand has started to drop off again. In anticipation of further reductions during the 4th quarter, carriers are planning to idle between 600,000 and 1M TEU's (roughly 85 to 145 vessels). While this volume of idled capacity isn't quite what we experienced in 2009/early 2010 (approximately 500 ships were idled), the removal of ships from service rotations will yet again decrease space available to shippers. Carriers are hopeful this decrease in vessels will help sustain carriers through the slow winter months. The idled vessels may also have an impact on the capacity available at the start of the 1st Quarter, especially when shippers scramble to have their products shipped before the Chinese Lunar New Year.
As additional changes in the marketplace occur, we will continue to send you alerts and updates of situations that may impact your business both now and in the future.
For more information, please contact our customer service department at customer@jmcgl.com or call us at 866.414.7505
