ANBLE Economic Forecasts Global freight costs stabilize amidst rising lumber prices.

ANBLE Economic Forecasts Global freight costs stabilize amidst rising lumber prices.

The Global Supply Chain: A Rollercoaster Ride

Global Supply Chain

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Unraveling the Near-term Outlook

If you’re wondering about freight shipping costs in the near future, hold on tight because things are looking quite mixed. Let’s dive into some details.

Trucking: A Rocky Road

When it comes to trucking, brace yourself for a 5%-10% increase in medium-distance rates. Unfortunately, the bankruptcy of the venerable Yellow Trucking, the fifth-largest firm in the less-than-truckload sector, has dealt a blow to the industry. The loss of this capacity is expected to put a halt, and possibly even reverse, the recent decline in rates. Dry-van rates are already down 22% compared to a year ago, while flatbed rates have taken an 8% hit in the past two months.

Air Cargo: Overcoming Turbulence

On the bright side, air cargo costs are expected to come down soon. As the bottlenecks in ocean shipping have mostly eased, cargo volumes are declining, enabling more favorable air shipping rates. In fact, the cost of shipping by air from Europe to the U.S. has already returned to pre-pandemic levels. However, China-to-U.S. rates are still a third above the pre-pandemic levels due to some expensive contracts that were signed during the peak of the air shipping boom. Thankfully, these contracts are set to expire shortly, bringing the rates back down.

Lumber: A Blaze on the Horizon

Now, let’s shift our focus to lumber. Brace yourself for a potential jump in prices! Canada, which supplies 80% of U.S. lumber imports, has been grappling with a severe wildfire season. Over 9.2 million hectares of forest have been burned, with a couple of more months to go before cooler and wetter weather helps extinguish the danger.

Although lumber prices have experienced a recent decline due to softer home-building activity earlier this summer, the landscape is set to change. With inventories of existing homes for sale at an all-time low, construction activities are expected to pick up. Coupled with rising demand and reduced supply, we could see a significant upswing in lumber prices, potentially shooting up by 20%.

So, buckle up, it’s going to be quite a ride!

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