On the one hand, the New Crown epidemic has changed people's behavior and they have become eager to shop online. On the other hand, the Biden administration's economic stimulus and the ongoing U.S. winter quarantine policy have added fuel to the fire.
Surging freight volumes have also pushed up prices, with the Baltic Daily Rate Index continuing to set new all-time highs, and this week, for the first time, freight rates on the U.S. East Coast topped $6,000.
The busiest summer of shipping
The Inbound Ocean TEU Cargo Volume Index (IOTI), which measures U.S. seaborne bookings of imported 20-foot standard containers, may touch a record high this week.
IOTI will have the honor of recording its busiest shipping period since January 2019 due to the New Crown epidemic.
On the one hand, the New Crown epidemic has spurred a surge in the "home economy" as people become eager to shop online, which has caused consignments to soar. On the other hand, the Biden administration's economic stimulus and the ongoing U.S. winter quarantine have added to the situation.
IOTI displays bookings a week in advance, which means it can gauge the cargo to leave its port of origin in the next seven days.
The data shows that bookings are set to soar next week, following the increase seen at the end of January.
However, bookings do not necessarily all translate into freight volume, as ocean freight providers have the right to choose whether to take orders or not, similar to the situation with ground freight. Interestingly, the Van Tender Volume Index (VOTVI) shows that in this case, shippers are spamming their suppliers just to increase their chances of success.
Since container import volumes have been closely linked to ground freight volumes and transportation demand, this simultaneously radiates a signal that U.S. domestic ground transportation providers will be exceptionally active this summer.
Analysis says that import bookings are a leading indicator of U.S. ground freight volumes and can reflect ground freight volumes 2-4 weeks in advance.
After a faster-than-expected recovery in consumer spending on durable goods last spring, merchants found themselves short of inventory and began restocking at a record pace in May last year.
This also led to a surge in truckloads, dragging down ground shipping times and narrowing the time gap between ocean and ground shipments.
Higher freight rates
Surging freight volumes are also pushing up prices, as the Freightos Baltic Daily Indices, which measure the daily price movement of delivering a 40-foot container on 12 major ocean routes, continued to hit record highs.
In an effort to bypass congested Southern California ports, freight rates on the U.S. East Coast were pushed up this week to top $6,000 for the first time.
In addition, both Houston and Savannah, Georgia, have seen a surge in truck traffic and tightening of capacity to record levels over the past month, and ocean tender rejections in the above areas have both hit record highs in the past two weeks.