Why 2021 Is Not The Year To Put Off Your Christmas Shopping

Let’s talk about why this is NOT the year to procrastinate your Christmas shopping, besides not wanting to fight over toys with parents on Christmas Eve, it goes a little further than that.

Let’s talk about the earth-shattering import volumes we’ve been experiencing for over a year now. To help explain those volumes we can look at the Inbound Ocean TEU Index for the US (IOTI).

IOTI is a good forecasting tool, it allows us to see how much demand is expected to reach a given US port 30+ days in advance. This is even more relevant when discussing seasonal goods as continuous above-average import volumes, as we’ve seen over the past year, have led to increased anchorages and above-average dwell times. So much so that many ports are starting to look more like parking lots instead of somewhere to load and unload cargo.

For example, the ever-popular picture of San Pedro Bay, which holds vessels looking to dock at the ports of Los Angeles and Long Beach, currently has 70+ ships anchored waiting to get unloaded. According to The port of LA’s SIGNAL data, the average anchorage time is up to 8.7 days. The port of Long Beach has also been experiencing explosive volumes, shattering monthly cargo records 13 of the last 14 months.

Combined, these ports make up 35% of the domestic import volumes into the US.

This historic volume surge has importers looking for ways to diversify their network and with the Panama Spread or the container rate difference from China to the North American West Coast minus China to the North American East Coast only about $1700 currently. For many importers it makes sense to explore East coast import options and one of those popular alternative solutions for several importers has become The Port of Savannah.

According to the Georgia Ports Authority, Savannah moved a record-breaking 450k containers in July–That’s a 25% increase from last year.

While the numbers for August have yet to be reported, with over 25 ships currently at anchor and future bookings strong, volumes do not seem to be subsiding anytime soon.

Other east coast ports experiencing explosive Year Over Year bookings currently are New York and New Jersey with 173% growth, Baltimore at 76%, Norfolk at 134%, Newark at 257%, and Jacksonville at 420% growth YoY.

The persistent amount of elevated import volumes for over a year now and bookings yet to arrive have and will continue to put pressure on an already maxed out domestic transportation environment. This requires an abundance of capacity operating efficiently to fill store shelves and fulfillment centers in time for Christmas.

When talking about the overall health of the domestic transportation environment SONARs OTRI paints a pretty good picture of the state of the overall TL market. The higher rejections rise the more it signals that supply and demand are out of whack. With rejections remaining above 20% since July of last year, it’s safe to say that demand has been overwhelming supply or capacity for some time now.

Now in “ordinary” market conditions rail would serve as a relief valve however, the pandemic has catapulted e-commerce demand years into the future and has proven to have some stickiness around the Amazon effect or the expectation of getting goods delivered much faster than ever before. Utilizing TL over rail however has proven to be beneficial for many retailers right now, whose biggest fear is not getting enough product on the shelves in time for the approaching holiday season.

We can see why many retailers share this fear as the most recent downstream average for transportation capacity within the Logistics Manager’s Index came in at a very compressed 28.8%.

For those who are not familiar with the, it is a change index not a measure of absolute growth with anything over 50% representing expansion and below 50% representing contraction.

According to the August release published on Sept 7th

“The Transportation Capacity Index remains historically low, indicating continued downward pressure on transportation capacity. Further, our data indicates that the downward pressure on transportation capacity remains extremely strong for downstream firms in supply chain, indicating that companies are facing significant challenges in ramping up shipments for the approaching holiday season.”

All this to say importers are experiencing an extreme amount of bottlenecking across all modes of transportation which directly impacts the speed at which goods are and will continue to be available to consumers.

So, if you want to avoid this…

Don’t wait until the last minute this holiday season or little Jamie may not get his long-awaited Turbo Man after all.

Why Use a Broker?

Just about every product made these days is at some point being transported on a truck. But shippers and manufacturers have a lot of options when it comes to determining who is going to be responsible for moving all that stuff around.

They can choose to do all transportation themselves – purchasing trucks, hiring drivers, and managing logistics internally.

They can choose to contract out to an asset-based company – a separate company that owns their own trucks to handle the logistics externally.

Or they can choose to contract out to a third-party logistics company, or broker – someone who doesn’t own any of their own equipment but will take on the responsibility of moving the product by contracting with trucking companies.

What’s the benefit of using the last option? Hiring a middleman to coordinate shipments could get complicated with them not having direct control over the trucks, right?

The third-party logistics industry is actually a $185.7 billion industry that is continuing to grow. As a 3PL ourselves, we actually have a lot more flexibility when it comes to handling logistics externally for shippers and manufacturers. We aren’t limited to a certain number of trucks – we can contract loads out to any available carrier that fits our criteria. We ultimately have complete control over which companies we choose to do business with, and we won’t work with carriers who have a history of being unsafe.

Not only are we not limited to a certain number of trucks, we’re also not limited to a certain mode of transportation. Sometimes it might be more efficient to transport product by multiple modes of transportation, and we have the ability to form relationships with many types of transportation companies.

If a customer needs one shipment expedited, a different one shipped via normal truckload, and yet another one shipped less-than-truckload, that’s not a problem because we can contract each of those loads out to different carriers.

Having access to so many different transportation options also allows 3PLs to become experts in figuring out which transportation solution is going to be the best for that particular shipment based on transit times, shipment size, location, and budget.

You hear about middlemen being cut out in certain industries, but 3PLs are such a big part of the industry that they are here to stay. Just like you could theoretically choose to buy a house without a real estate agent, a shipper could arrange their transportation by themselves. But brokers in any industry add value by having in-depth knowledge – saving you the time from figuring it all out yourself.

As a broker, we love operating within such a large and dynamic industry. Logistics is fast-paced, and we pride ourselves on keeping up on the latest trends to provide our customers with solutions tailored specifically to their freight.

By Allison Walke, Talent Acquisition & Onboarding