At a Glance: Q2 2021 Logistics Bulletin Summary & Outlook

Air

• Global air volume, measured in CTKs, reached an all-time high in March. Volume is likely to continue increasing throughout 2021 based on market indicators. (1)
• Air cargo capacity is slowly returning to the market when compared YoY but is still behind 2019 levels by 12%. The supply of capacity can’t meet the shipping demand and so rates are likely to continue increasing. Rates are projected to increase by an average of 17% globally in Q2, with China-outbound lanes increasing by up to 60%. (2)
• Airlines are not planning to increase their fleet size for the summer amidst concerns of a 3rd COVID wave and reduced passenger interest. As a result, we don’t expect the capacity shortage to be remedied any time soon. (3)

Ocean

• US Ocean imports rose to the second-highest recorded levels ever in March. 2.2 million TEUs of volume were shipped—a 50% increase YoY. March is usually a slow shipping month for US imports, so the stage is set for 2021 to break previous volume records. (1)
• US inventory-to-sales ratios are trending upwards but still sit near 30-year lows. Retailers will intend to increase their inventory supply in preparation for the Fall peak sale season, so ocean capacity will continue to tighten and rates will continue to rise. (2)
• Ocean carriers posted significant profits in 2020 and are confident that market conditions will allow an even greater profit showing for 2021. Carriers are placing orders for new vessels and equipment, but these won’t enter the market until 2023 at the earliest. Ocean shipping volume is expected to continue growing through 2024, so the ocean cargo market is likely to favor sellers for years to come. (3)

Truck Freight (Domestic)

• The truck freight industry was characterized by a softened market in Q1 2021. Severe weather and supply chain shortages caused a larger than normal drop in shipment volumes. (1)
• As freight networks were disrupted, capacity temporarily tightened, most particularly in affected regions (2)
• Market conditions picked up in March and April, driven by built-up freight demand. (3)
• US on-highway retail diesel prices averaged $2.90/gal in Q1 2021, up 44 cents from $2.46/gal in Q4 2020. Diesel prices averaged $2.89/gal the previous year, in Q1 2020. (4)

 

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Contributors: April King, Tyler Lesley