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MRC Global is the chemical industry's source for a complete range of PVF products in carbon steel, stainless steel and special alloys.
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Rob Saltiel has served as our president and chief executive officer since March 2021. He has also served as a director of MRC Global Inc. since March 2021.
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MRC Global InSight November 2021
MRC Global's magazine, InSight, is published bi-annually for our customers and features product lead times, data, sector information and price trends.
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The unprecedented challenges that the global supply chain has faced continue to constrain transportation and logistics in the PVF space. For the remainder of 2021, we expect to see continued stress on capacity and higher prices for all carrier modes due to varying factors, including: reduced availability of cargo ships; driver shortages in the over-the-road (OTR) markets; global challenges in port operations capacity and throughput; constriction in air cargo freight capacity; and the global struggle to contain the effects of COVID-19 and the highly contagious Delta variant. MRC Global’s Transportation team continues to monitor conditions and indices and works closely with contracted service providers to navigate this complex and volatile space.
Below are the summaries for each mode of transportation based on input from our global providers.
Vessel constraints and limited space have forced ocean and container rates to climb exponentially. The cost of shipping a container jumped nearly five times the average due to decommissioned vessels, port labor constraints and increased demand. Container rates from China to the U.S. west coast are approximately $20,000, and approximately $14,000 from China to Europe.
Globally, approximately 25% of container vessels are awaiting anchorage outside of ports. Congestion continues at China's top two container ports, Shanghai and Ningbo, following a temporary shutdown of a container terminal in Ningbo in August. Port operations globally are constrained due to resource shortages resulting from COVID-19 restrictions and other employment factors. Despite incremental improvements, scheduling remains a challenge due to port congestion. In June 2021, month-over-month schedule reliability improved by 0.8% to 39.5% but was down -38.2% year-over-year, highlighting the uphill battle to return to normal trends.
Although contracted rates and spot rates are stabilizing, they are still severely inflated compared to 2020. On average, contract rates are at $2.90/mile and higher (excluding fuel) for flatbed and steel haulers, as compared to the 2020 high of $2.35/mile reached in December. The spot market is at $2.75/mile (excluding fuel) and is expected to climb as the holiday season approaches. Driver shortages are a major variable in capacity constraints due to COVID-19 relief and DOT industry measures driving many owner/operators to “park” their equipment. As more consolidation takes place in the industry, rates and capacity will be challenged leading into 2022.
Air cargo capacity continues to be restricted due to several factors, including: shifting volume from other constrained modes and lanes; limited or canceled commercial routes; and residual effects of COVID-19. The space available on current charter and airline flights is at a premium. Rates have been increasing year-over year and are approximately 77% higher than 2019 and 20% higher than 2020. Volumes have also increased dramatically, up 33% over 2020.
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