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In Transit: Ocean Freight Rates Down, Schedule Changes Up, UPS Sales Pop on Exports and E-Commerce

Unsteadiness seems to best describe the state of global shipping, with ocean freight rates staying low and schedule changes on the upswing, while UPS sees strong business overall on the ground and in the air, held down by natural disasters.

Container rates

The World Container Index, Drewry’s composite of container freight rates on eight major routes to and from the U.S., Europe and Asia, was down 1.2% to $1,207.46 per 40-foot container or equivalent unit (FEU) for the week ended Thursday, and was 11 percent below the same period of 2016.

Drewry said the average composite index year-to-date is $1,501 per FEU, $114 lower than the five-year average of $1,615 and 11 percent lower than a year ago.

Drewry’s composite index lost another $15 per FEU this week to reach $1,207. The World Container Index between Shanghai and Rotterdam stood at $1,252 per FEU this week, with a change of just $2. The rates on Shanghai to New York slashed $41 to reach $1,789 per FEU. Similarly, the rates from Shanghai to Los Angeles fell by $27 to reach $1,321 per FEU. The proposed November GRI and the demand increase in the month will pull up the rates from next week, Drewry noted.

Schedule changes

Meanwhile, data just released by CargoSmart shows that the pace of carrier schedule changes, which challenges managing the supply change, has increased.

According to the Hong Kong-based CargoSmart, the average number of schedule changes by carriers calling at Europe ports between July and September was 6.1 changes made per schedule, and almost half of those schedule changes were greater than 24 hours.

Of the top three Europe container ports, Antwerp had the highest average number of changes at 7.4 per shipping schedule, and Rotterdam had the highest percentage of schedule changes that were over 24 hours at 49 percent.

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CargoSmart said from demand sensing, to optimization, monitoring and customer service, Internet of Things technology can help to improve supply chain visibility. Using sensors, shippers can track goods from the raw materials warehouse to the retail store and beyond. In terms of ocean shipping, from July to September 2017, CargoSmart found on average 5.4 schedule changes per sailing schedule. Of these changes, 43 percent of the changes were more than 24 hours.

DHL‘s Ocean View platform, introduced in June, allows shippers to track their ocean freight shipments and improve their end-to-end supply chain planning. Ocean View consolidates information from DHL’s Transportation Management System, the ocean carrier and the vessel itself for real-time visibility of the ocean transport. It also provides a forecast on future milestones, as well as a notification feature in case of route changes or delays.

UPS delivers

On the ground and in the air, strong global commerce trends and e-commerce expansion aided UPS’s sales in the third quarter, while operating profit was flat from a year ago at $2.04 billion, held down by the domestic package unit that was negatively impacted by the series of hurricanes in the U.S. and Caribbean.

Overall revenue rose 7 percent in the quarter to $15.98 billion.

“Our International segment continued its track record as a growth engine, generating strong top-line and operating-profit growth driven by robust demand for UPS solutions,” said David Abney, UPS chairman and chief executive officer. “Export shipments grew across all regions as customers took advantage of UPS’s expanded portfolio and enhanced network.”

[Read more about UPS: UPS Store Goes Beyond Basics to Support Small Businesses]

Daily export volume is up 19 percent, for the third straight quarter of double-digit growth, with all regions of the world contributing.

The Supply Chain and Freight segment produced record third quarter results with double-digit revenue growth and near double-digit operating profit expansion. Tonnage gains in Freight Forwarding, UPS Freight and Coyote Logistics contributed to improved top-line results.

The Domestic segment continued to benefit from online retail customer demand for UPS Next Day Air and Ground services, which drove a 3.9% increase in revenue in the quarter to $9.65 billion. The company said the U.S. consumer increasingly prefers to shop online and UPS is benefiting from this trend through its portfolio of convenient and economical delivery solutions.