Below are some factors that we are following that you may find of interest.
National Diesel Prices
In one of the few bright spots for trucking companies, US Diesel prices have fallen every week of 2020 and now sit at $2.38 / gallon. This is the lowest we have seen diesel prices since the fall of 2016.
Ocean Container – East Asia to US West Coast
Despite significant reductions in global trade, Asia to US container rates have remained relatively consistent. Steamship lines have been able to better control capacity through blanked sailings, which has worked to maintain their rates.
WTI Crude
Crude futures went negative in April as the May delivery contracts were set to expire. This was due to the lack of storage space as demand evaporated. Since then, futures prices have rebounded. One would anticipate that oil prices will increase in the coming months as the economies of the world re-start. A concern is that they could go significantly higher as many US producers have been forced out of business due to their relatively high extraction costs.
TL Rates
TL rates continued their free-fall in April and May. Average spot rates are now around $1.60 / mile with some lanes reported to be under $1.00. Contract rates have also fallen, although not as quickly. One would anticipate that the impact of COVID-19 will significantly decrease capacity, especially for the smaller trucking firms and owner-operators that rely on the spot market. This lost demand will likely result in significantly higher rates as the market regains equilibrium.
About the Author
Mike Mulqueen is the Executive Principal of Strategy & Innovation at JBF Consulting. Mike is a leading expert in logistics solutions with over 30 years managing, designing and implementing freight transport technology. His functional expertise is in Multi-modal Transportation Management, Supply Chain Visibility, and Transportation Modeling. Mike earned his master’s degree in engineering and logistics from MIT and BS in business and marketing from University of Maryland.
About JBF Consulting
Since 2003, we’ve been helping shippers of all sizes and across many industries select, implement and squeeze as much value as possible out of their logistics systems. We speak your language — not consultant-speak – and we get to know you. Our leadership team has over 100 years of logistics and TMS implementation experience. Because we operate in a niche — we’re not all things to all people — our team members have a very specialized skill set: logistics operations experience + transportation technology + communication and problem-solving skills + a bunch of other cool stuff.
