At a Glance: Q3 2021 Logistics Bulletin Summary & Outlook

Posted on August 24, 2021

Air Freight International

Global air volume, measured in CTKs, declined slightly from the record values seen in Q1. However, volume has remained consistent through Q2, especially when seasonally adjusted for the slower mid-year months(1)

Capacity in July was up 29% in July over 2020 levels, although load factor declined by 3%. Airlines are likely to reduce capacity somewhat to adjust to shipping demand. Air flight demand has been lowered due to consumer fears amidst COVID delta variant outbreaks. As a result, bellyhold storage capacity is expected to remain low until 2023-2024. Airlines have adjusted by increasing freighter usage, with the freighter market share having risen to 70% from 51% in 2020 (2).

Air rates are positioned favorably compared to ocean rates, being only 6-8 times ocean costs compared to the typical 11-15 times (3).

Ocean Freight International

US Ocean import volume continues to rise year over year but has not returned to the records levels seen in Q1. Retailers project that imports will continue to increase YoY until October (1).

US inventory:sales ratios continue to sit at low levels despite importers best efforts to restock their goods for peak season. Consumer purchasing hasn’t shown any signs of declining in the wake of the surge of online sales spurred by COVID. The high volumes of imports that have been witnessed over the last year are now believed to be the new baseline import volumes—roughly 30% more than pre-pandemic values (2).

Ocean carriers continue to increase their profit margins as retailers battle for vessel space in an industry whose infrastructure fundamentally can’t support its growth. Spot and contract rates alike continue to increase, but some of the largest contributors to the exploding rates are peak season and emergency congestion surcharges being levied against shipments (3)

Truck Freight (Domestic)

The US trucking market was challenged with market disturbances since the beginning of the year, notably with a large rush of imports, persistent pandemic effects, and difficult weather conditions.  (1)

Capacity struggled to enter the market since the beginning of the year, due in part to the complicated flow of volume through networks. (2)

Growth in truck rates cooled down in June, usually the busiest month for trucking, and into July with truckload spot rates rising more slowly. (3)

US on-highway retail diesel prices averaged $3.21/gal in Q2 2021, up 31 cents from $2.90/gal in Q1 2021. Diesel prices averaged $2.43/gal the previous year, in Q2 2020. (4)

To download the full logistics bulletin click here.

Contributors: April King, Tyler Lesley


Air References:

1. https://www.iata.org/en/iata-repository/publications/economic-reports/air-freight-monthly-analysis---june-2021/

2. https://www.aircargonews.net/airlines/freighter-operator/ongoing-boost-from-shipping-and-bellyhold-shortages/

3. https://www.freightwaves.com/news/cargo-airlines-cancel-hundreds-of-china-flights-amid-covid-outbreak

Ocean References:

1. https://www.joc.com/maritime-news/container-lines/asia-west-coast-container-rates-break-new-ceiling-ahead-surcharges_20210729.html

2. https://www.joc.com/maritime-news/container-lines/sustained-us-imports-point-new-trans-pacific-volume-floor_20210813.html

3. https://www.joc.com/maritime-news/delayed-us-imports-holding-back-sales-shippers_20210804.html

Truck References:

1. https://ziplinelogistics.com/blog/q3-2021-trucking-trends-and-freight-market-update/

2. https://www.freightwaves.com/news/no-lull-to-see-here-spot-rates-post-fresh-all-time-highs

3. https://www.joc.com/trucking-logistics/us-truck-rates-may-soon-peak-they-won%E2%80%99t-fall-far-analysts_20210811.html

4. https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf

Chart 1: https://content.ftrintel.com/hubfs/Events/Webinar%20Slides/2021-07-08%20Shifting%20Environment%20FTR%20Webinar.pdf