Ocean vs Surface Volume

[Vllad]

“East-West freight rate index, a weighted average across key Asia-Europe and transpacific trade routes, declined for the eighth consecutive month. Between January and March it dropped 5.8% to $2,270 per FEU, a 28% decline from the high of July 2010. “


I have never seen a trend before where ocean volume fell but domestic traffic increased. I always knew domestic traffic was a good indicator on the health of our economy.

I guess now we will see if ocean traffic is any indicator on our future. I have been waiting to see how this plays out since this is new territory in my life time.

To be honest I can't explain this trend. Our imports are falling like bricks but the domestic traffic increased 3.4%.

What the hell is going on here?


Vllad

[Vanraw]

Indeed what the hell is going on? Could it be warehoused inventory that was build up? Or perhps soem compitiion that is handling the Ocean freight?

I thought it was interesting also that the long haul trucking companies here in Iowa seem to have alot of trucks parked again. This after being empty for several months.

Perhaps we are in for some bad news in the next couple quarters. Historically September and or October are places where strong corrections in the market happen.

[Jakensama]

Is it just rates you reported falling, that can be attributed to the fact that container ship rents are falling and that a lot of time the carriers are adding ever increases 'fuel surcharges' to keep the actually reported freight rates down.

[Vllad]

Jake,

The ocean carriers are parking boats so it has to be more then just rates.

Maull,

People no longer can afford to hold inventories at those kind of levels. To cut cost the average retail DC size has dropped some 200% since 1980. I just don't think people have the ability to hold 9 months of inventory.

Even JC Penny which had the largest DC capability in the US as recently as 1990 has pretty much blown us their DC capabilities.

Inventories are a thing of the past.


Maybe the ocean volume is a tell tale sign long before the surface is? Typically when ocean drops surface drops right with it but I only have like a 20 year sample.


Vllad