Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.
Image credit: FreightWaves
This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email and you'll also get Benzinga's ultimate morning update AND a free $30 gift card and more!
No one needs to tell the users of transport services how high freight rates have climbed during the past two years. But recently released producer price data from the federal government provides empirical evidence to support the painful anecdotes.
The numbers are striking. Import air cargo rates rose 80% from January 2020 through January 2022, due largely to a massive curtailment of belly cargo capacity, which in normal times accounts for about half of international air commerce. Freight brokerage rose by 45% over that time. Rates for truckload, LTL and specialized transportation increased 25%. Parcel rates rose 14.7%, while prices for warehousing services increased 20.5%, with much of that coming after July 2021 as demand spiked hard due to the ripple effect of supply chain bottlenecks at various U.S. seaports.
"We have never seen anything like this before," said Jason Miller, associate professor of logistics at Michigan State University's Eli Broad College of Business, referring to the extent of the increases. Miller built a series of charts from the data, which came from the Department of Labor's Bureau of Labor Statistics and the U.S. Census Bureau.
The good news, at least for some users, is that January's numbers may be the worst of it, Miller said. For example, his data indicates that demand for truckload services has plateaued as consumers throttle back on what has been an unprecedented two-year spending orgy. At the same time, more truckload supply is entering the market, helping to tamp down rates. The risk for truckload rate declines in the second half of the year is quite high.
The warehouse labor force also expanded dramatically, with the government making massive upward revisions of labor participation beginning as far back as May 2020 (see chart). From January 2018 through January 2022, warehouse employment in the U.S. rose 59.3% or 647,200 workers, Miller said, citing government data.
Want Private Access to Benzinga Analyst?
Check out the latest strategies our team of experts are using every week so that you can always adapt to the market like the pros!—Get FULL Access to This Week's Webinar Here.
Source: Bureau of Labor Statistics
LTL still has plenty of pricing runway, Miller said. LTL carriers' prices have risen substantially less than the truckload sector since the start of the COVID-19 pandemic, according to his data (see chart). LTL carriers operate in a relatively concentrated marketplace that, in recent years, has made their services somewhat less resistant to downward rate pressures. In addition, LTL shippers typically value service over price and are willing to accept higher rates for service quality and reliability. LTL carriers have forecast contract rate renewals of 10% or more, levels that are nearly unheard of in the sector.
Source: Bureau of Labor Statistics
Hand-wringing over higher prices tends to obscure the reality that transport services represent only 2% to 6% of the cost of goods sold, depending on the value of the product being shipped, according to Satish Jindel, CEO of Ship Matrix, a consultancy. Miller said that his data corroborates that figure. What makes this cycle different is that higher freight costs are eating into manufacturers' gross margins at the same time that materials costs are also rising significantly.
This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.