By Richie Lin.     Photo：Matheus Cenali

Last week, the annual growth rate of CPI (Consumer Price Index) in USA in July was 8.5%, which went down a little bit from 9% in June. The main reason of decreasing is the drop of oil price, but the price of food and commodities are still in peak. In addition to the decreasing of CPI, the NFP (Non-Farm Payroll) numbers in July was 528,000, which was better than the market expectation. Influenced by the better CPI and NFP, market is optimistic that FDR will only increase 13 base points for interest rate in 2022 and stock market began to rise reflectively. Even though mood is bright, but suppressing inflation rate to healthy 2~3% is still the major and long task for FDR in 2022. Economy will not get better soon because inventory is still high and companies are not willing to invest more on expanding factories, equipment under high interest rate. Consequentially, customers will not need logistics arrangement as much more as the crazy 2021. The lesser demand drove the rate downward to near 50% lower compared with the rate in first quarter of 2022. Lower rate means lower profit margins for logistics suppliers. However, it is healthier for the market to adjust the inflation caused by excessive logistics cost. Unlike the downward-going freight rate, transit time from Asia to USA and Europe has not improved to the level before the outbreak of Covid-19. Even though port congestion of Los Angeles has been eased currently, but we begin to see the congestions happening in ports such as Vancouver/Savanah, railroads, and IPI. Additionally, the ongoing inflations made workers in ports, railways, trucks to threaten strikes for better benefits. The fear of congestions and unstable transit time drive customers to maintain arranging shipments to avoid empty shelves in the stores even though they still have inventory on hands. After considering multiple pros and cons, Just In Time (JIT) theory has changed to Just In Case (JIC) theory when customers are planning their supply chain cycles. They prefer to arranging containers with different time schedules to minimize the danger of not receiving items on time. Therefore, even though people admit there will be no peak season this year, ocean freight and airfreight will be still required for the wholesaler and retailers to refill the inventory for consumers. Balance of supply and demand between space and rate will become normal gradually, so every player in the global supply chain needs to adjust mentally for the impact of this new normalization and try their best to find market positioning. From now on, this will be a test for who can survive under competition and elimination.

Ocean FCL market rate reference in week 33:

• Asia main ports to USAWC USD 6000~8000 per 40GP; 
• Asia main ports to USAEC USD 9500~10500 per 40GP; 
• Asia main ports for IPI points of USA is USD 11000~12500 per 40GP. 
• Asia main ports to Europe base ports and West Mediterranean: USD 10000~14000 per 40GP.  

Please note above rate is only for reference, carriers might only give space for higher rate, which will be from USD 7,000~14,500 per 40GP for different destinations.

Airfreight market rate in Week 33:

Airfreight rate might increase abruptly without further notice. The following market rate for your reference. 

• PVG/SZX/HKG/TPE to LAX USD 8.2/kg, 
• PVG/SZX/HKG/TPE to ORD USD 8.8/kg, 
• PVG/SZX/HKG/TPE to JFK USD 8.2/kg.

Appreciate if you could share TGL Blog among your friends who are interested in first-hand market information of supply chain and updated economic incidents.