Many of the largest carriers have produced their 2021 Quarter 1 Earnings Statements and the prevalent theme is surprisingly good. The original estimates had the industry performing very well, however, they were quickly reduced in response to the crippling winter weather storms that covered all of the Midwest and Texas in February. It was a nice surprise that the adverse weather did not have a negative effect on the earnings of most carriers, overall. Just to name a few: Saia, J.B. Hunt, UPS, Old Dominion, & Ryder all posted higher-than-expected first-quarter earnings. Tight capacity coupled with businesses and consumers alike ramping up their spending spurred a large increase in demand keeping prices elevated and trucks running non-stop. The question now is whether or not the first quarter is indicative of what will happen for the remainder of the year.
Every Importer and Exporter has an eagle eye on Ocean Cargo rates right now. There are so many factors at play that even the best forecasters are hesitant to give hard numbers on what the next 30-60-90 days look like regarding pricing. The consensus is that they will trend up and below are the factors to watch.
Spring marks not only the return of blooming flowers (and the pollen that comes with them) but also a peak season in shipping. Produce reigns supreme as loads picking up in the southern US, from Florida to central Texas, increase between 15% and 31%. The South-to-North produce loads are very lucrative hauls for carriers. This leaves freight in two other main areas scrambling to find a truck.
- Chinese New Year:
The annual holiday for many Asian countries will come later than it usually does, but even in times for Covid-19 it will have a major impact on manufacturing and production. Any supply chain that includes countries celebrating Chinese New Year will experience a shutdown of some kind during this period. The holiday officially runs from February 11th to February 26th this year. Shutdowns begin a week before the two-week long holiday and production will return to current levels by the end of February.
With 2021 right around the corner, most shippers are still fully-engaged in trying to finish out 2020’s shipping needs as efficiently and cost-effectively as possible. Everyone has done the best they can weathering the freight storm of 2020, but many are wondering if 2021 will bring that much relief or be as volatile as the past 10 months. We at M&A don’t have a crystal ball telling us exactly what 2021 will bring, but we do have a fair forecast of what to look out for in the next year.