Freight Prices Normalize; The Magic of People; and My First Climbing Comp

Satvik Agnihotri

Nov 18, 2022

Hi there,

Thanks for tuning in this week. Here’s a quick overview:

Freight demand is coming down from its all tie highs and beginning to equilibriate.
For me, talking to people who have the same wavelength of ambition and natural curiosity for the world naturally breeds a lot of enthusiasm for life.
Miscellanious Stuff: First Climbing Comp ✅ + Applications for CU Boulder & Universirty of Washington ✅

Freight Prices Equilibrating

Check out these graphs:

After about 1.5 years of sustained highs in freight rates, the price of shipping containers between the East and West is coming back down to normal.

The chart below is specifically between Shanghai-LA:

Rates have dropped ~80% since the highs in September of 2021, so far.

Wild.

Flexport Research complements this data showing Ocean Delivery Times continue to fall.

This suggests less congestion in supply chains as bottlenecks are starting to clear up and shipping delays return to normal conditions.

And further complemented by the Kansas City FED Index:

Liz Ann Sonders @LizAnnSonders

Future supply chain stress nonexistent per November ⁦@KansasCityFed⁩ Index … outlook for supplier delivery times has crashed to lowest on record

These charts and data seems to indicate that congestion is starting to allevaiete from our supply chains.

One can expect that these improvements in our supply chain will allow companies to run leaner and improve profitability.

Unforuntately, this is happening at the same time of small trucking companies getting crushed.

While retailers were caught flat-footed with empty warehouses and had to quickly scale up to meet consumer demand, demand in the spot market (the market for one-off trucking routes) had a temporary surge.

From July 2020 to June 2022, almost 195,000 new carriers entered the market, according to Vise of FTR. These trucks specifically catered to the spot market.

The spot market usually accounts for 10-20% of the overall trucking market. Vise said that share may have climbed to as high as 50% in the height of COVID-buying craziness.

Graph showing price to move dry van on the spot market — *The rate to move a dry van on the spot market climbed through 2021.*

The rate to move a load on the spot market soared. Each month of 2021 seemed to break a new record in the rate to move a dry van, with the peak hitting in January 2022. It was a fantastic time to be a small trucker, who can pick up spot jobs easily.

(FreightWaves, 2021)

Since then, ACT Research published a report about lower freight costs, partially hastened by softening demand for durable goods.

While demand for spot pricing is slowing, costs are rising.

According to the Department of Energy, diesel has been 44% higher during the month of October, compared to 2021.
In addition, according to a July report from Truckstop.com, the cost of parts and truck maintenance are also up from 2021.

red and white truck on road during daytime — Photo by Yassine Khalfalli on Unsplash

“It won’t be long now before none of us small guys can exist,” said Steve Berg, a Chino Hills, California-based truck driver. “Everything has doubled in price while rates are collapsing.” (Freightwaves, November 2022).

Amidst the alleviating congestion, it seems small trucking companies are left vulnerable to being squeezed.

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The People Unlock

Over the last few weeks, I’ve found it difficult to maintain my ambition while being in a traditional type-A school environment.

This week it became clear to me that all it takes is one or two conversations with people who are on the same wavelength to energize and brighten my entire week.

Spending time with ambitious and intellectual people feels like home. I’m learning the power of being very intentional with the closest 5 people to me.

By prioritizing time with certain people and resisting the influence of others, I find more enthusiasm in my day to day.