Below are some factors that we are following that you may find of interest.
National Diesel Prices
US Diesel prices went up .004 cents for the week of May 29th. This is after they had fallen every week of 2020 and now sit at $2.39 / 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.
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.
While we are seeing signs of a bit of a rebound and a Memorial Day bounce, 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. COVID-19 will significantly decrease TL 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.
Mike Mulqueen is a Partner at JBF Consulting and leads the Logistics Technology Strategy practice. JBF Consulting is a unique supply chain execution consultancy of TMS experts. Sign up here to receive the JBF Freight Transportation Bulletin, published monthly: http://bit.ly/JBFbulletin2020.
Founded in 2003, JBF Consulting is a supply chain execution strategy and systems integrator to logistics-intensive companies of every size and any industry. Our background and deep experience in the field of packaged logistics technology implementation positions us as industry leaders whose craftsmanship exceeds our client expectations. We expedite the transformation of supply chains through logistics & technology strategy, packaged & bespoke software implementation, and analytics & optimization. For more information, visit us at www.jbf-consulting.com