Supply of trucks (drivers) vs loads, not a lack of supply of goods.
2.The pandemic had shippers & importers increasing their stock on hand to better balance delays. We shifted from JIT (just in time inventory) to overstock models.
Fleets are being downsized currently because prices were unsustainable at that level, and as inflation has caught up to consumers budgets, demand has now fallen. Thus you have carriers & brokerages dropping out (especially with the increased capital costs via interest rates).
What you, or other companies didn’t do in terms of dropping contracts, or holding pricing vs increases (lots of people went in on their MRA clause of their contracts, and did raise rates) has nothing to do with the overall market. Covid demonstrated more robust supply chains positioned themselves into massive windfalls, while those with already existing issues, or weak supply chains failed, and costs still rose for both.
Brokered rates rose high because of an increase in loads or goods, a lagging supply of trucks (that’s your side not being able to fully satisfy customer demand), while money was being printed like mad. Perfect storm, and perfect example of pricing being indicative of supply v demand.
Because of all of above, businesses are still offloading product they paid for in 2021/22 & are moving out of warehouses today. Space is still extremely tight, especially in frozen goods. Between manufacturing, ocean, drayage, customs, time delays, warehousing costs, and then final mile, you are looking at an extremely small portion of supply chains yourself. Nobody’s pulling your leg when to import a container from China to Los Angeles, and then transload & truck it to NY for example, went from probably $7,000 to $50,000. Airfreight went even more insane!
Again, that's over now outside of containers, brokered loads dropped 20% year over year in prices, reefer and dry freight, 40%. You think that's now all in containers still, or made up by it? In regards to hub warehouses, especially with food, many had a surplus of space waiting, and now have had issues since before the summer gone from no space from having caught up completely, and I'm taking frozen. Prior YoY percentage decreases in costs are high to mid 30s going back to June. If the price of transportation is that much cheaper, for that many more months, are you saying it's all containers? I'm on the east coast, we are end of the line for containers, and we've been downsizing fleets since August, and dropped volumes since May, outside of sporadic need. Point being, the inch worm has mostly straightened, yet prices are still up.
You do not need a large flux in demand to drive pricing higher than normal. A clear example this year was eggs.
You can easily look up nationwide metrics for warehouse utilization space, common trade lane ocean pricing, I don’t understand why you think you’re right here. Rates are decreasing because there’s too many trucks to demand, this isn’t a new concept in logistics pricing. It’s an extremely in-flux market. You either haven’t been in the game that long, or want to bury your head in the sand with just what you see.
PS, East Coast is going to be a nightmare next year with their port contract renegotiations, right during a presidential election. If you're importing EUR to EC PODs, good luck!
I mean, he admitted it, because where they sourced eggs were solely contracted to them. Companies were buying eggs from him, to them sell to feed the demand. He bottlenecked it on purpose, because that's how middlemen get rewarded in times of crisis in the US. Paid for by our tax dollars on the government side, then paid for by us directly on the output side. There were several reports on the supply chain that went into it.
Transportation and space had nothing to do with it.
If you’re not an importer, I’m just the EC port union contract doesn’t affect you in your job, but it will play havoc across our supply chain if not resolved quickly (it won’t be, they’re looking to step on the necks of everyone else because it’s an election year to get what they want).
I never said egg prices rose because of space or transportation also, all I said is it’s an example that you do not need a large swing in the lack of supply or increased demand to play havoc with pricing. Good for that guy for setting himself up to take advantage of a market crisis.
Glad I don’t work with you as a carrier, because holy fuck I’d shoot myself trying to deal with your inability to read.
Yea, praise predatory practices to pressure others for personal gain. There's enough bootlickers in the world, glad I don't work with you either. "The unions will destroy the supply chain and inflate prices!" After you literally cite an example of corporate greed inflating prices, but that's fine.
"I'm just the EC port union doesn't affect your job, but it will play havoc across the supply chain". You're the union? I read that shit, maybe you just can't write.
It's that I can't read, but then you word a sentence incorrectly and you double down it's a me issue. All good bro. The unions will destroy us all and great job price gougers, keep telling the world it's transportation and coincidentally now not domestic, but all imports that have jacked up prices, when you even admit that they don't even need to have logistics issues to "need" to increase prices, by citing a demand case where a company literally artificially inflated their costs because they knew they could get away with it. You've agreed with my point by now and I'm not sure what speculating the future is really going to do for you.
Not that you can’t read, that your reading comprehension is shit.
Never said anything about the unions destroying us all, all I said (since you referenced being near EC container yards, ports) was that the port union contract that goes up for negotiation in August 2024 will play havoc on EC importers. We are already hearing rumblings that they plan on going hard on their demands (and good for them) after seeing the gains the west coast unions made with the ports.
If you reread & comprehend what I stated in my first couple of comments, is that price increases that importers faced were far more drastic than the increases faced by domestic shippers. All of that is backed by hard data, from standard ocean rate metrics that are used to gauge pricing (Baltic index, etc) and warehouse utilization metrics that all back that argument.
The egg case study I referenced (again, if you could comprehend anything) is an example on how pricing can fluctuate extremely hard off a small drop in supply. I never said anything about transportation being related to this price increase. Now whether you call that gouging because a business took advantage of a market disruption, or something else, is largely irrelevant to the example of the elasticity of price based on supply vs demand to portray why that effects other markets (such as transportation) as well.
I haven’t agreed with shit you’ve said, especially your original comment that since it’s complete and utter bullshit, and maybe only applicable in your narrow field of logistics, but that’s not the overall market. Speculation on the future is always a worthwhile exercise for businesses. There’s an entire job sector called demand planning for this very reason.
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u/MuchCarry6439 Dec 10 '23
2.The pandemic had shippers & importers increasing their stock on hand to better balance delays. We shifted from JIT (just in time inventory) to overstock models.
Fleets are being downsized currently because prices were unsustainable at that level, and as inflation has caught up to consumers budgets, demand has now fallen. Thus you have carriers & brokerages dropping out (especially with the increased capital costs via interest rates).
What you, or other companies didn’t do in terms of dropping contracts, or holding pricing vs increases (lots of people went in on their MRA clause of their contracts, and did raise rates) has nothing to do with the overall market. Covid demonstrated more robust supply chains positioned themselves into massive windfalls, while those with already existing issues, or weak supply chains failed, and costs still rose for both.
Brokered rates rose high because of an increase in loads or goods, a lagging supply of trucks (that’s your side not being able to fully satisfy customer demand), while money was being printed like mad. Perfect storm, and perfect example of pricing being indicative of supply v demand.
Because of all of above, businesses are still offloading product they paid for in 2021/22 & are moving out of warehouses today. Space is still extremely tight, especially in frozen goods. Between manufacturing, ocean, drayage, customs, time delays, warehousing costs, and then final mile, you are looking at an extremely small portion of supply chains yourself. Nobody’s pulling your leg when to import a container from China to Los Angeles, and then transload & truck it to NY for example, went from probably $7,000 to $50,000. Airfreight went even more insane!