Logistics companies that transport U.S. lumber to ports overseas met with some turbulent waters in 2021, especially when it came to the supply chain problems. One respondent to this survey called the industry “erratic.”
However, another transporter said, “The shipping volumes have been steady in the 4Q, maybe slightly less due to the shipping interruption caused by the Chinese New Year. The first quarter of 2022 should remain consistent since the demand for North American Hardwood is still strong.”
Another said, “(We) remain confident in our ability to handle even the most difficult transportation issues.”
Stephen A. Zambo
Ally Global Logistics
Weymouth, MA
The shipping industry, since March of 2020, has been what I would describe as erratic. We have not seen stable pricing or accurate schedules for well over a year now. Now the only thing about freight prices is that they are higher than they have ever been.
What I believe is the largest issue is the lack of vessel reliability. Dates on every vessel are shifting up to three weeks, and on average we are seeing ETA’s delayed about 16 days. This has presented major problems, as it is impossible to accurately schedule truckers to pick up or deliver loads when you have no idea when the vessel will actually be receiving freight. The lack of accurate information puts pressure on loading facilities to have product ready to go at any time while eating up valuable space. It puts pressure on truckers as they need to schedule import deliveries/picking up empty containers while ensuring they remain compliant with various regulations (such as how many hours a driver can consecutively be on the road). This puts pressure on freight forwarders who need to submit shipping instructions to avoid being rolled, even though the vessel may not be receiving for another week.
The “good” thing is that we are all in this together, and everyone now understands how vital a smooth supply chain is. The “bad” thing is that I do not see this going away in 2022 without a lack of freight demand to clear up the entirety of the supply chain. As long as we continue to see various ports and countries shut down due to COVID-related issues, we are going to continue to see disruption on some level. The only way to combat the fluctuation in schedules is through building more partnerships through the supply chain and constantly communicating to all parties involved what the updated dates are. This is a herculean task as many steamship lines forgo advising shifts altogether until it is too late.
At AGL we spend a minimum of 40 percent of every day re-working shipments due to date shifts. It’s a challenge to do this day in and day out, but that is what helps to make a valuable partner.
In 2022, I do not expect to see many, if any, rate increases. There may be a few markets that take slight increases throughout the course of the year, but as a whole, I expect freight rates to China and Southeast Asia to remain stagnant and in some cases potentially to be reduced. I see this happening with China prior to Southeast Asia due to Southeast Asia’s reliance on transshipments and feeder vessels. Rates to Europe, the Indian subcontinent, the Mediterranean and the Middle East should remain stagnant or be reduced throughout the course of the year.
Of course, this is all based on the fact that we have seen record demand throughout 2021, and at some point, it will be unlikely this level of demand remains. In regards to Q4 2021, we saw a slight uptick in volume versus Q4 of 2020. The only difference is that in Q4 2021, AGL, like many shippers had the opportunity to blow the previous year out of the water but are unable to do so due to the various supply chain related issues. Many steamship lines effectively capped how much lumber they would take since it’s a cheaper freight rate and a heavy commodity. This put us in a position in which we were doing double or triple the work for next to the same result.
I expect Q1 2022 to remain strong and I fully expect all of the supply chain related issues to remain. We are an e-commerce driven country with most of the manufacturing housed in other countries. Until this changes, we will always have an abundance of challenges when in a strong market, like we’ve been in. I believe that we will continue to remain in a strong market through 2022. At some point the market should cool down, but, given that we’ve dealt with a pandemic and are still navigating the back log of the pandemic, I do not see the U.S. economy or the shipping market slowing down anytime soon.
We are fortunate to have the relationships that we do across the supply chain from our trucking partners, to our customers that have made operating over the last 18 months more palatable than it could have otherwise been. I expect another strong year for the U.S. economy, the lumber market, the shipping market and AGL in 2022.
Lloyd Lovett
King City/Northway Forwarding Ltd.
Montreal, QC
I read an article on transportation with the headline “Drowning in Disruptions.” Whether it be COVID, labor or natural disaster related, the transportation industry is never catching up. There was a definite shortage of truck drivers in 2021 and it’s not looking good for 2022. With terminal congestions, waiting time to deliver or pick up containers at the port, some transportation companies are simply opting out of the containers business and focus on domestic freight. To characterize the transportation trend for the lumber industry, domestic freight shipments are stable while container/export moves struggled in 2021.
The rule of thumb is, if there is a weak link in the supply chain you change, but in this case the chain is broken. When you have, on average, 50 container vessels per day at the Port of Los Angles waiting to get unloaded and, then, the top person in charge of the Department of Transportation takes a three-month paternity leave, it certainly does not help the supply chain issue. I really want to be optimistic for 2022 but I see more of the same for at least the first two quarters.
The import rates have more than quadrupled in the last year for containers coming from China to North America. I really don’t think they can sustain those rates, so I see them reducing. Even though export ocean freight rates have gone up steadily in the last two years, they are lower than they were in 2010.
The shipping volumes have been steady in the 4Q, maybe slightly less due to the shipping interruption caused by the Chinese New Year. The first quarter of 2022 should remain consistent since the demand for North American Hardwood is still strong.
I’m hoping that inflation stabilizes without interest rates increasing. Now with this new strain of Omicron that we all must deal with, it leaves a lot of companies in limbo for the future. This will only have a negative effect on the economy.
Curtis Struyk
TMX Shipping Co., Inc.
Morehead City, NC
2021 was the most tumultuous year in the 33 years I’ve been in the freight forwarding business. We experienced lack of vessel space, a shortage of truck power, port and rail ramp congestion as well as a shortage of containers and chassis. However, the most frustrating trend was the lack of dependability in vessel schedules.
Because of all the constraints in the shipping industry, it took five times the amount of work to make and manage an export booking. Under normal circumstances, we book a shipment, send the information to the appropriate parties, and the schedule rarely changes. In 2021, vessel schedules changed daily. We also had to make bookings 30 days in advance because of lack of vessel space, making our job very difficult but also making us more relevant and valuable to our customers.
Having a staff of 40 and specializing in the export of wood products since 1980, we have an advantage because of our expertise, the relationships we hold and the volumes we ship, enabling us to navigate difficult times while servicing our customers at a high level. We expect the current demand for space to remain high and the shipping woes to continue but remain confident in our ability to handle even the most difficult transportation issues.
We expect rates to remain the same through the first quarter of 2022 with the possibility of a slight increase to the fuel bunker. As long as the shipping environment stays in its current state, we do not expect this to change.
In Q4 2021, we were averaging 4500 FEUS (40-foot equivalent units) each month with a small lull due to Chinese New Year. We expect this trend to continue into Q1 2022. The economy shows no signs of slowing, and inflation has proven not to be transitory. I do agree that many of the supply bottlenecks we are currently experiencing should subside by the second half of 2022.
