Both marine and trucking rates have been coming down off their 2020-2021 peaks and supply chain bottlenecks are easing. PHOTO by Pexels.
Canada’s job shops and machine distributors who suffered under high transportation pricing combined with unreliable delivery for the better part of two years now can start to breathe a sigh of relief.
Both international and domestic freight rates appear to be on a downward trend, according to the latest market data, and supply chain bottlenecks are easing or have completely disappeared.
At this time last year, containership rates from Europe and particularly from Asia had been highly inflated due to a number of issues, including a boom in demand and the impact of severe containership bottlenecks. The traffic jam of container ships had reached epic proportions with more than 100 ships waiting to unload at the port of Los Angeles/Long Beach and another 50 or so waiting at other U.S. ports. Shipping rates remained high through the first quarter of last year and even though the bottlenecks were whittled down through the Spring, by mid summer the number of waiting ships was back up to around 150.
But that seemed to mark the end of the congestion. The number of waiting ships has been on steady decline since then. By November, the congestion issues were a thing of the past.
Rates meanwhile also started heading in a positive direction for Canadian importers and exporters. There was gradual decline in spot rates during the first half of last year, which accelerated in the early fall and then fell off a cliff, according to FreightWaves. Rates are likely to continue heading in a downward direction in 2023 with a large amount of new ships about to hit the oceans, increasing supply.
It’s been similar, albeit not quite so drastic, for ground transportation in North America. After reaping the benefit of high rates in 2020 and 2021, truckers started to come back down to earth in 2022. Spot rates declined 27.6%, according to the FreightWaves National Truckload Index. On the contract market, which makes up a larger part of the cargo moved, the contraction hasn’t been as severe but rates have dropped 6% over the same period, according to FreightWaves.
Carriers being flush with cash from the previous couple of years, this drop in transportation pricing hasn’t result in rash of bankruptcies that commonly follows such drops in pricing levels. That means capacity will remain loose enough to place continued downward pressure on truck rates.
