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November 26 2018

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14 The Journal of Commerce | November 26 2018 www.joc.com Cover Story in early 2018 to 98 percent. "The market has receded to high-normal levels (of capacity utili- zation) and is expected to fall further in 2019, especially in the second half," said Perry, who heads consult- ing firm Transport Futures. Except for periods of economic contraction, truckload utilization rates have re- mained between 96 and 100 percent over the past 18 years, with the latest spike being the highest. The recent drop in truck utili- zation rates is likely a sign trucking companies and truck drivers are adjusting to the ELD mandate, which crimped capacity and sent rates high- er a year ago. A 98 percent utilization rate isn't low enough to exert much immediate pressure on pricing, how- ever, especially if demand remains consistent or escalates. Pricing pressure from land to sea With eastbound trans-Pacific spot rates hitting highs and space still scarce, US importers should expect upward pricing pressure at least through the end of the year (Story, page 16). A fair amount of freight arrived in the US and moved inland from the West and East coasts in June and July, making August, September, and even October softer months for truck freight than many in the trucking industry expected. Hurricanes Flor - ence and Michael and even typhoons in Southeast Asia helped dampen freight demand in September and October. That changed in early November, as higher spot-market truckload demand off the West Coast signaled the start of the "traditional" fall peak season for trucking. Load-to-truck ratios in Los Angeles hit 12 to 2 Nov. 3, while dry van spot rates for outbound Los Angeles freight rose, in contrast to declining spot rates across most of the country, DAT Solutions said early this month. Volumes out of Stockton, Califor- nia, also rose in early November. Seat- tle volumes jumped 34 percent, and were expected to keep rising because of ship congestion in Puget Sound. The average dry van spot truckload rate out of Los Angeles rose 10 cents in the week that ended Nov. 10 to $2.79 per mile, a 17-cent two-week gain, with the Los Angeles-Phoenix quarter in terms of customer demand, and very little discussion about there being excess equipment," said Victor Garcia, CEO. Utilization in CAI's leased container fleet rose to 99.2 percent in the quarter, compared with 98.2 percent a year ago. Railcar utilization was rose 9 percentage points to 87 percent. Strong ocean shipping market Garcia sees strong demand for containers continuing in the fourth quarter, not just in the trans-Pacific trade but Asia-to-Europe ship- ping lanes as well. "There is some front-loading of demand, but the global economy really is strong, and that has positively surprised our customers," he said. "We haven't seen a drop-off because of fourth-quarter seasonally being a little bit weaker. As we get into the first quarter (of 2019), we expect there will be some lull." The company's North American logistics business, which includes intermodal and truckload brokerage, increased revenue 49 percent year over year to $31.4 million." Analyzing spot truck market data from Truckstop.com, economist Noel Perry believes the truckload capacity "crunch" in the US has receded from its peak in the first half of 2018. "The mar - ket is tight, but no longer critically so," Perry said in his Transport Navigator blog Nov. 6. Truck utilization rates have dropped from higher than 100 percent said. "They're like waves crashing on the beach. When there are hurricanes, those waves crest. This peak is going to be like one of those surfing movies from the 1960s and 1970s." However, shippers and their logistics providers are bracing for those waves, he said. "The international air freight business will become crazy again, but everyone is a little more pre - pared this year, it won't be a surprise. There will be a peak, there will be some congestion and price spikes, but it won't be the insanity we saw last year. That insanity is now the new normal." Waves of containers continue to hit US coasts and drive distribution channels inland. Imports have slowed from the peak months of June and July, "but remain at unusually high levels as retailers continue bringing in merchan - dise before tariffs increase in January," the latest Global Port Tracker report from the National Retail Federation and Hackett Associates said. "Imports usually drop off signifi- cantly by this time of year, but we're still seeing numbers that could have set records in the past," Jonathan Gold, NRF vice president for supply chain and customs policy, said Nov. 9. "Part of this is driven by consumer demand in the strong economy, but retailers also know that tariffs on the latest round of goods are set to more than double." Container and railcar lessor CAI International had "a strong third 1,500,000 1,600,000 1,700,000 1,800,000 1,900,000 2,000,000 2,100,000 2,200,000 Jan. Feb. March April May June July Aug. Sept. Oct. TEU US import growth slowed in October Source: IHS Markit © 2018 IHS Markit Laden US import TEU volume with year-over-year change 9.4% 9.7% 4.4% -0.3% 1.6% 3.2% 8.9% 1.8% 9.4% 5.5%

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