Trucking Costs

Right now the world is focused on vessel freight. Bottlenecks in container and bulk shipping have the ability to bring entire supply chains to a halt, as we are seeing in the Strait of Hormuz.

However, an aspect of trading that often goes overlooked in the mainstream is trucking costs. Trucking is responsible for the vast majority of first and last-mile deliveries. From warehouses to consumers and from production sites to ports or rail-heads, trucks are critical to physical movement of commodities.

Vessel costs are usually nominally higher than trucking, however, on a $/mt basis trucking can actually make up a larger percentage of overall costs to a trader.

As trucking costs increase, whether due to fuel, equipment shortages, or driver availability, there is a direct increase in cost of goods. Inflationary pressure can come just as much from a 300-mile truck trip as a 3000-mile ocean transit.

What makes this even more challenging is that trucking markets are far more fragmented and less transparent than ocean freight. There is no single benchmark that everyone references. Prices can vary significantly by region, availability, and even time of day.

A small move in trucking can completely erode a margin that initially looked attractive and unlike ocean freight, there is no futures market to hedge that exposure.

The traders that consistently outperform are not just watching flat price or vessel freight, they are carefully analyzing the full end-to-end movement, especially the parts others often ignore.