International Ocean Rates Continue to Surge. What Options Do US Importers Have?
We want to keep you informed on the latest market updates and news. Read the below brief for updates on international market pricing:
Ocean import rates from Asia base ports to the US west coast increased by 35% between the end of July and the end of August. This pushes the current Shanghai Container Freight Index to an all-time high of $3,639 into the USWC.
The impact of the spot rate surge is especially evident when compared year-over-year where the variance between the current SCFI rate ($3,639) and the same index from this time last year ($1,615) is $2,024.
This variance on its own is over $400 higher the actual 2019 rate, a data anomaly that has been true for each of the last 5 weeks.
One of many underlying concerns for importers right now is how to budget for ocean freight through the end of 2020 and into next year?
While certain routing adjustments have offered limited relief, eShipping is helping customers look at the bigger distribution picture and using its country-wide network of distribution centers, which all operate on the same WMS system, to shorten the length of transit between international vendors and the US based end user.
When done right this approach can lower the total landed cost of a supply chain, and actually improve customer experience by speeding up delivery times in an increasing direct-to-consumer market.
Questions? You can learn more and request a quote online at https://www.eshipping.biz/home/international.
eShipping Distribution Services to Open a Dallas/Fort Worth Warehouse This Fall
We are excited to announce that this Fall 2020, eShipping is poised to open our next warehouse facility in the Dallas/Fort Worth area!
As one of six eShipping Distribution Services warehouses, this facility offers clients 145,000+ square feet of state-of-the-art warehousing and fulfillment services, customized to each client’s specific needs.
“eShipping Distribution Services is ready to increase the scale of the company, which translates to new investments that benefit customers in other locations,” Matt Weiss, Chief Operating Officer, said.
With this addition, our customers benefit from having multiple routing options on the ocean imports, allowing them to bring supplies all-water via Houston or inland by rail from Long Beach.
“A Dallas/Fort Worth warehouse has frequently been requested from our customers,” Matt said. “We are excited to increase the scale of the company that benefits our customers in other locations.”
For a complete list of warehousing services or to lock in your 2021 rates, contact us today at eShippingDistributionServices.com.
Logistics Analytics as a Competitive Advantage
In 3PL Central’s recently published 2020 Industry Report, they quote Supply Chain Executive Magazine in saying, “The days of third-party logistics companies competing on prices are over. The successful ones now use another factor to gain an edge: analytics.”
This couldn’t be more evident in the environment eShipping, competitor 3PL’s and Freight forwarders find themselves.
Overview:
Picking a 3PL solely off price is a short-term technique
Logistics providers that can show value in the analytics space will do better long-term for your company
95% of shippers agree that analytics are necessary
In 3PL Central’s recently published 2020 Industry Report, they quote Supply Chain Executive Magazine in saying, “The days of third-party logistics companies competing on prices are over. The successful ones now use another factor to gain an edge: analytics.”
This couldn’t be more evident in the environment eShipping, competitor 3PL’s and Freight forwarders find themselves.
Armstrong & Associates note that in 2018 that 86% of domestic Fortune 500 companies use 3PLs for logistics and supply chain functions. As the only partner directly connected to every player along that chain, 3PLs must ensure that the terabytes of data processed on a daily basis flow through without any flaws or disconnections.
According to Eye For Transport (EFT), 95% of shippers agree that analytics are a necessary element of 3PL expertise however only 26% of shippers are satisfied with current analytic capabilities.
How does your access to fast, accurate, and relevant data stack up?
If you’re not completely satisfied with your current analytics visibility, please contact us at connect@eShipping.biz or click here to set up a time where we can talk about your business and logistics goals.
5 Ways Amazon is Changing the Manufacturing Industry Forever (And What To Do About It)
Procurement professionals and B2B buyers now expect high levels of customer service, shipment visibility, and an enjoyable checkout experience when purchasing products and materials from suppliers. In fact, companies are switching suppliers for a more consumer-like experience, with "free" shipping, instant order visibility and tracking, predictive shopping, and more.
Overview:
Amazon has set online shopping customer experience standards for B2B companies
B2B professionals want the came online shopping experience as B2C
Manufacturers should invest in eCommerce and fulfillment solutions to stay ahead of the industry and customer needs
Procurement professionals and B2B buyers now expect high levels of customer service, shipment visibility, and an enjoyable checkout experience when purchasing products and materials from suppliers. In fact, companies are switching suppliers for a more consumer-like experience, with "free" shipping, instant order visibility and tracking, predictive shopping, and more.
The Amazon Effect has already impacted companies across multiple industries and paved the way for a new way of thinking.
How can manufacturers, distributors, and suppliers improve their supply chain customer experience? What are practical examples and strategies to create an eCommerce buying experience like Amazon? How can we plan for and adapt to so we can stay ahead of the competition?
Watch the video below.
Uber ‘Re-Evaluating’ Non-Core Units Like Freight, WSJ Reports
Uber Technologies has laid off 3,000 more employees and closed 45 more offices, The Wall Street Journal reports, just after the first round of layoffs that totaled more than 3,700 employees.
Overview:
Tech heavy freight management solutions under pressure to return profits
Uber Freight lays off 6,700 employees and raise rates on several key customers by double-digit percentages
John Paul Hampstead, Director, Passport Research
Uber Technologies has laid off 3,000 more employees and closed 45 more offices, The Wall Street Journal reports, just after the first round of layoffs that totaled more than 3,700 employees.
CEO Dara Khosrowshahi wrote in an email to employees that Uber was “making really, really hard choices right now,” including re-evaluating non-core cash burning businesses like Uber Freight and autonomous driving. Khosrowshahi said that Uber was looking at “strategic alternatives” for its staffing business Uber Works, but did not use that language specifically for Freight.
“We remain committed to growing the Uber Freight business, innovating in the Freight industry, and supporting our partners – carriers and shippers alike,” an Uber Freight spokesperson told FreightWaves. “Today’s news does not impact our product roadmap, or our ability to provide best-in-class service to our customers.”
Uber Freight, Uber’s digital freight brokerage business, had already adjusted its growth strategy and the way it priced freight to customers as part of Uber’s new emphasis on driving toward profitability. As late as February 2020, Khosrowshahi said that Uber would be EBITDA-profitable by the end of 2020, but the coronavirus pandemic pushed that date back to 2021.
Uber’s financial reporting and channel checks across the freight brokerage industry confirmed that Uber Freight was adjusting its model earlier this year. Uber Freight raised contracted rates on several large customers by double-digit percentages. Multiple sources told FreightWaves that the digital brokerage gave back a multi-million dollar award to a Fortune 100 consumer packaged goods shipper earlier this year.
And the digital brokerage’s attitude toward growth changed – the first quarter of 2020 marked the second quarter in a row that Uber Freight’s gross revenue had declined sequentially. Still, the $199 million in gross revenue Uber Freight reported in the first quarter 2020 put it on a $796 million annual run rate, enough to place the business in the top 15 or 20 freight brokerages in the United States.
But Uber Freight is far from achieving profitability; the segment lost $64 million in ‘adjusted EBITDA’ in the first quarter of 2020, which was admittedly better than the $81 million loss in the fourth quarter of 2019. Uber’s financial reporting makes it impossible to reconstruct Freight’s gross margins – the typical measure of performance for non-asset third-party logistics providers reliant on purchased transportation – or its operating costs. Uber Freight’s operating costs are thought to be much higher than most freight brokerages because of its investments in technology, which allowed the business to move tens of thousands of touchless loads.
In January, the Chicago Tribune reported that Uber was offering some of its new Chicago space up for subleases; when FreightWaves questioned Uber Freight management earlier this month, they did not comment further on the subleasing.
The question around Uber Freight has always been how and why it fits into Uber’s overall business. Uber’s Rides business was unique because the company created capacity by convincing people to drive passengers in their own cars, but the Freight business cannot create Class 8 trucks out of thin air. That left Uber Freight subject to the supply-and-demand dynamics of a fragmented, highly competitive market with many tech-savvy brokerages already established. Freight brokerage revenue, it turns out, is more volatile – and so are its margins – unlike the B2C marketplaces for rides and food delivery that Uber has effectively been able to create and control.
Ultimately the difficulty of acquiring non-recurring freight revenue and managing volumes in a volatile, cyclical industry makes freight brokerage a fundamentally different kind of business than Rides. And the variable performance of a digital freight brokerage could ultimately be dilutive to Uber’s valuation, if it got big enough to matter.
In July 2018, FreightWaves wrote about Uber shuttering its autonomous trucking program, which had the potential to make its freight brokerage offering something truly revolutionary: “If Uber Freight loses the benefit of selling the concept of an autonomous trucking future, investors might prefer company executive attention on protecting and building out the core business.”
"Durable Goods" Data Shows Alarming Decrease For Second Consecutive Month
Thursday, May 28 The Commerce Department released the Monthly Durable Goods Report which makes for bleak reading. An ominous sign of future economic activity particularly as it relates to the shipping industry.
Overview:
Key economic logistics forecasting drops 17% in April
Shipments of core GDP related products decrease for the third month in four, fueling recession fears
Thursday, May 28 The Commerce Department released the Monthly Durable Goods Report which makes for bleak reading. An ominous sign of future economic activity particularly as it relates to the shipping industry.
The manufacture and shipment of Durable Goods (expensive items that last three or more years), and one of their subset categories, Core Capital Goods (tangible goods or services) are used by economists as leading indicators of future economic activity because as Investopia notes, “Businesses and consumers generally place orders for durable goods when they are confident the economy is improving. An increase in durable goods orders signifies an economy trending upwards.”
The full report, which can be found here notes, “New orders for manufactured durable goods in April decreased $35.4 billion or 17.2 percent to $170.0 billion… [which] followed a 16.6 percent March decrease.” The report confirms that, “Transportation equipment, down three of the last four months, led the decrease, $23.9 billion or 47.3 percent to $26.6 billion.”
Like with Orders, the Shipments of Manufactured Durable Goods decreased in April for the third time in the last 4 months by, “$41.5 or 17.7 percent to $192.3 billion. This followed a 5.5 percent March decrease.”
Additional GDP reporting from the Commerce Department released May 28 revised first-quarter GDP figures to a 5 percent decrease instead of the previously estimated 4.8 percent contraction. These datasets as Lucia Mutikani of Reuters explains, “ leaves economists expecting gross domestic product could drop in the second quarter at as much as 40%, the worst since the Great Depression.”
Sources:
