2023 Household Goods Shipping Outlook

January 12, 2023

Hello!

Hope your year is off to a healthy start!

Starting off this newsletter a trivia question whose answer can be found at the end.

How much is the toll for a container ship to pass through the Panama Canal?

Last year brought us incremental improvements over 2021 in a few areas and increased challenges in other areas. Domestic service was greatly improved, with international seeing transit time and cost pains.

Based on the trends that developed in the last quarter, 2023 will see some easing of some of the pains from the last few years.

Labor costs and crew availability will continue to be the biggest challenges we face everywhere.

While many are predicting a global recession, new initiations for Karlibow remained very strong in Q4 of 2022, and 2023 is off to a blistering start. This leads us to believe that volumes should remain healthy for at least the first part of the year.

For international moves, we are expecting better transit times and for most lanes, lowered costs, especially on sea freight.

The intense port congestion on the West Coast ended last summer and we are happy to report after two rough quarters on the East Coast, things are almost back to normal.

A final bit of good news is that lumber prices have started to ease and at this time we appear to have no COVID-19 restrictions causing immigration or transportation issues.

Areas to watch for in 2023.

1. As mentioned earlier, labor will continue to be the biggest challenge. Beyond finding moving crews and drivers, the global transportation infrastructure is under regular threat from labor strikes. 2022 saw many strikes at air and sea ports, as well as parts of the US rail system. The threat and in some cases likelihood of this remains in 2023.

2. Rail service in the US will persist. Read more about that here.

3. Container shipping reliability will remain volatile. A recent report found that ships arrived on time 56% of the time in November, which is a big improvement from the 30% recorded earlier in the year. In 2018 and 2019 the average was 74%.

4. As freight demand decreases, operators have started to cut back on fleet size and if this continues we could see capacity issues resurface.

5. Restrictions on shipping electronic items of all sizes are on the rise. Some airlines have banned all electronic devices in cargo shipments. A shipping line has recently decided to not allow full electric cars like Tesla onboard. This could become quite a burden on the transferees given the number of electronic items we regularly ship.

Finally, we still have ongoing political unrest of various severity throughout the world and of course extreme weather events that impact everyone.

As always, thank you for reading and your feedback is encouraged.

Be well!

Trivia question answer: $450,000 is the average toll for large container ships, with the highest ever toll being $829,468 back in 2016. The toll calculation is complex with ship size and amount of cargo being two of the big factors. This toll is paid by the shipping line and is calculated into their rate. Here is MOL Benefactor passing through the canal back in 2016 for almost $.8 million.