— This is the script of CNBC's news report for China's CCTV on Sep 14, 2021, Tuesday.
According to industry information provider Cass Information System, U.S. freight rates in August increased 27% year-over-year, which is the biggest increase since 1990, the first year on record. Freight shipments in August increased 12% year-over-year and 4% over August of 2019.
It's been largely driven by retailers stocking up ahead of the holiday season. Meanwhile, some manufacturers are also trucking extra orders of semiconductors. In the United States, shipping via the rail system is cheaper. But volumes of containers on rails have declined in recent weeks. That's largely because of a shortage of the chassis used to haul containers, causing a growing bottleneck in Chicago and some other key transferring points linking the West Coast and East Coast of the United States. That pushed up demand for truck loading and freight rates. The shortage of chassis is largely a result of increased tariffs. In May, tariffs on related steel products totaled more than 200%.
Besides the shortage of equipment, a scarcity of truck drivers also contributed to the rising rates. Large retailers such as Amazon and Wal-Mart are competing to hire drivers for their own logistics needs, which makes the situation even worse for third-party shipping companies. Overall, shipping capacity remains constrained in August.
125 or so containerships are anchored off North American ports. A record high of 49 is at the Los Angeles Port. The CEO told us in an interview earlier that one of the reasons behind port congestion and shipping delays is that the domestic transportation system can't deliver those goods fast enough.
With the holiday season coming, shipping demand is expected to remain high. And new research from the Berkeley Research Group shows that more American customers are shopping online now as infection surges in some areas, which may push demand even higher.
We cannot ignore the potential adverse impact of the current hurricane season. Freight rates are unlikely to come down soon.
ACT Research, Vice President and Senior Analyst
" For transportation companies, it's safe to say that this is the best pricing environment ever and for shippers, it's safe to say this is the most challenging freight cost inflation year in history."