West Coast Surge: More Disruption Ahead for Truckload Shipping
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The West Coast capacity crunch in the truckload market is upon us, and shippers are feeling its effects. As an influx of consumer goods manufactured in Asia dock at West Coast ports and move eastward in time for the holiday season, higher-than-normal rates are typical. Let’s look at what we’ve seen so far this year.
July-August: West Coast Awakens
Late summer marked the official end of the summer slump as we saw the market begin to turn for West Coast lanes:
- In late July, container rates out of China began surging—jumping up 35% for West Coast freight and 13% for East Coast freight since February 25.
- Outbound tender volumes from the West Coast began increasing about three months earlier than normal—up 12% out of Los Angeles and 39% out of Seattle since March 1 (FreightWaves).
September-October: Storms Intensify the Surge
The seasonal uptick in freight combined with tropical storms in September further squeezed capacity in the west throughout October:
- Hurricane Florence made its biggest impact on the East Coast in September, but West Coast freight experienced a tailwind as trucks were diverted and cargo ships were re-routed.
- Typhoon Mangkhut impacted ships in and near Hong Kong, which led to traffic disruptions at the Ports of Los Angeles and Long Beach (a top U.S. destination from China).
- Dry van load-to-truck ratios saw increases in California, Oregon, Idaho, and Utah—reaching 8.4 loads per truck in the Los Angeles market at one point (DAT).
- Dry van spot rates from Los Angeles to Dallas averaged $2.07 toward the end of October, which is 13% higher than September’s average of $1.82 (FreightWaves).
November: Record-Breaking Volumes Move East as Fires Wreak Havoc
With tariffs on Chinese goods increasing from 10% to 25% on January 1, supply chain managers are working to stock their warehouses with as much inventory as possible before the new year (FreightWaves). This has contributed to all-time high volumes at the ports of Los Angeles and Long Beach. Just this week, the Ontario, California market surpassed Atlanta as the top freight market in terms of outbound load volume.
That volume is now making its way to regional distribution centers throughout the country. Dallas and Houston volumes began climbing in the first week of November by 8.4% and 4.5% respectively.
In the Pacific Northwest, produce season is heating up. From apples in Washington to potatoes in Idaho, a large volume of fall and winter fruits and vegetables are being harvested and shipped to food manufacturers, grocery stores, and other vendors across the country. Additionally, Christmas trees (many of which are grown in the Pacific Northwest) are in high demand this year thanks to millennials opting for pine over plastic (Bloomberg). All of this creates increased demand for refrigerated capacity, and as a result, higher rates.
Lastly, California has experienced some of its deadliest and most destructive wildfires on record this month. The fires have wreaked havoc on supply chains, as businesses have been displaced and trucks have been diverted due to road closures and hazardous conditions—further disrupting freight patterns and capacity in the West.
Interested in helping victims of the California fires? The American Red Cross and California Community Foundation’s Wildfire Relief Fund are two great organizations seeking donations.
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