RCS MARKET UPDATE

OCEAN MARKET

OVERALL

We are coming off of a highly successful and engaging TPM 2023 Conference. The conference was focused on the positive, with a strong focus on re-building shipper and carrier relationships. Following two years of the most disruptive supply chain, many are relieved to now be operating in a sense of normalcy.

"Picking up the Pieces" was the theme for 2023. While most can breathe a sigh of relief, we also must recognize that there are still uncertainties that exist-on going labor shortages and macroeconomic conditions to name a few. "As the extreme turmoil of the market begins to subside, what comes through most clearly, is the interdependence of all key parties-carriers / shippers/ forwarders. Building on last year's theme of "Relationships Matter" leaders are continuing to see importance of building and repairing relationships. - CEO Craig Stauffer, Vanguard.

Highlights and insights from TPM 2023

RATES

There is a clear desire to return to more stabilized pricing structures this season. Most shippers have begun their RFPs or will be soon. Rate levels have been mostly stable for the past few months after the steep declines of 2022. Current spot rates are below levels where many shippers are signing for longer term deals. Rates expected to increase slightly over the summer and into fall.

PORT UPDATES

Port congestion has largely cleared. The slowing of the economy hashelped with the decongestion of the overall supply chain. Once the economy grows however, we need to be prepared for the recovery. Being prepared means investing in people and structure. Growth with come. Technology will also play a key role in handling and predicting future surges. Carriers continue to implement blank sailings as a capacity management strategy. Schedule reliability is hovering at 56% on-time.

Oakland BNSF is showing delays due to low volume and is halting schedules to combat the decreased volume; USEC- slight delays due to weather; Houston port entering spring which brings foggy conditions, attributing to weather delays.

The labor negotiations on the west coast continue to be a cause of concern, having been dragging on since May of last year. With little progress, some shippers are continuing to divert cargo to the east coast and US Gulf ports.

AIR MARKET

OVERALL

"There is solid ground for cautious optimism about air cargo. Yields remain higher than pre-pandemic, and China's much faster than expected shift from zero-COVID policy is stabilizing production conditions in air cargo's largest source market. That will give a much-needed boost as companies increase their engagement with China." - Willie Walsh Director of IATA

RATES

Supply is tightening out of South China and SE Asia, with a slight increase in rates. Market demand and rate levels expected to rise as we move towards quarter end.

AIRPORTS

Shenzhen Bao'an International Airport is investing significantly intheir cargo handling terminals. SZX has launched the construction of eight facilities projects with total investment of $720m and a footprint of 800,000 square meters. Project completion which also includes a third runway, is expected to open by middle of 2023. Their goal is to move 2.1m tons of air cargo by 2025.

Milwaukee Mitchell International Airport (MKE) is opening a new air cargo facility with a goal to alleviate congested gateways. Project consists of 288,00 sq. foot building with 74 docks doors and 99 trailer stalls, located directly on the tarmac. Planned opening is Q3 2024. This cargo airport will serve as an alternative to ORD.

U.S. Export demand is steady and all U.S. airports are operating efficiently.

US DOMESTIC TRUCKING

OVERALL

Softening continues through March and the market remains loose with capacity readily available. The current load: truck ratio is 2:1. Big focus has been on connecting global and US domestic modes through technology. RCS for example has partnered with Four Kites to enable our operations and clients with access to accurate real-time data, predictable ETAs and empowering them with an on ground logistics solution. If you are interested in a demo, please reach out to [email protected].

RATES

Truckload freight rates are down 6.2% vs 6 months ago. RFP activity is extremely strong at this time of year and with the relatively softer market, many shippers are questioning the sustainability of the cutthroat pricing that is coming in.

FUEL

Diesel this Week: $4.247

vs Last Week: $4.292(down 0.8%)

vs Same Week Last Year: $5.250 (down 19.1%)

"One truckload carrier noted that in prior years during a soft market there would be more rightsizing of fleets but after what they witnessed the past two years, they are being more cautious in protecting their capacity in anticipation of the market recovering towards the latter half of the year of early 2024, whether that happens depends largely on trends in consumer demand and the China factor". - TranzAct Technologies.