Chart of the Week: Outbound Tender Market Share – Atlanta, Ontario SONAR: OTMS.ATL, OTMS.ONT
Atlanta’s percent of total U.S. freight market volume has fallen greater than 11% over the past 12 months, in accordance with FreightWaves tender volume data. On the opposite side of the country, the Ontario, California, market has recovered over 14% of its share of the outbound trucking market. Supply chain shifts and a comparatively inexpensive transportation market are driving forces.
Freight takes the trail of least and usually most cost-effective resistance. Through the pandemic years of 2020-21, the West Coast port and rail infrastructure was overwhelmed, causing prices to skyrocket and repair to deteriorate across the nation’s largest port complexes of Los Angeles and Long Beach.
Imports from Asia represent a big percentage of freight volume within the U.S. and most of that entered through the Southern California ports as it’s the fastest and most cost-effective route — until the pandemic.
Importers were forced to seek out alternative pathways to bring their freight into the U.S. and diverted shipments into Eastern ports with more frequency. Ports like Savannah, Georgia, a feeder for Atlanta market freight demand, exploded.
Many thought much of this volume would stick, but that has somewhat faded. Savannah currently represents roughly 7.44% of domestic maritime import shipments, down from its peak value of seven.9% in 2022 and up barely from 2019’s 7.3%.
With drought impacting the Panama Canal’s larger Neopanamax locks this fall and the conflict within the Middle East creating problems for ships across the Suez Canal, importers are seeing more reason to resume shipping into the nation’s largest port complex in Los Angeles and Long Beach.
The Inbound Ocean TEUs Volume Index (IOTI), which measures bookings of twenty-foot equivalent units by departure date from the port of lading, for Savannah is down 20% annually this past week. The IOTI for the Port of Los Angeles is up 73%, a trend that has been relatively consistent since this past spring.
Aside from geopolitical and environmental disruptions — each increasing themes over the past several years for supply chains — cost is an undeniable factor.
Maritime container rates spiked from China to the North American West and East coasts in 2021-22, but not proportionately at times. When the spread is smaller, it makes shipping into the Eastern ports more favorable. The associated fee of surface transportation can be an enormous factor.
In December 2021, the common dry van truckload spot rate from Los Angeles to Philadelphia was $9,600. The associated fee of shipping from Savannah to Philadelphia was $2,650 — a difference of nearly $7,000.
At the identical time, the fee of moving a forty-foot equivalent unit from China to Los Angeles was ~$14,600 versus ~$16,500 from China to Savannah — a difference of $2,100. If service is comparable, and presently it was greater than likely higher, shippers could save nearly $5,400 per shipment moving their goods into the East Coast.
The present spot rate from Los Angeles to Philadelphia is $5,300, and Savannah to Philadelphia is $1,450. The spot rate for containers from China to LA is around $1,600 and to Savannah is $2,300. This could make the savings around $3,150.
The savings continues to be there to an extent, however the service scenario has reversed. The overall value proposition of shipping into the East has dramatically fallen and subsequently so has the surface freight volume originating within the Atlanta market.
Freight demand moving back to the West Coast could make it easier for the market to destabilize as carrier networks are typically more strained once they must cover longer distances. This shift back to a different pre-COVID shipping pattern may reemerge as one other supply chain pain point when capability finds more of an equilibrium with demand.
In regards to the Chart of the Week
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