AmerCareRoyal - Market Update Q1 2021

Shipping and Supply Chain Logistics

The Ocean Freight industry struggles to regain smooth sailing in 2021.

▪ “Shipping space on container vessels is extremely difficult to obtain now, leading to overflowing warehouses that are filling with manufactured products awaiting shipment, leading to increased costs.” An AmerCareRoyal General Manager based in Asia ▪ Annual contracts with Ocean Carriers normally help shippers stabilize freight expense; – In the current environment, however, container space is not-available and carriers have stopped accepting bookings at contracted rates – This forces shippers to pay spot-market rates up to $3,000 above normal contracted levels – Industry analysts predict that the new profitability of spot market rates will influence contract rate pricing upward going into 2021 ▪ Container shipment reliability on all routes from Asia to the United States hit all-time lows in late 2020 – AmerCareRoyal’s Shipping Logistics Team reports inbound ocean freight delays ranging 2 to 4 weeks regularly since November 2020 at Los Angeles / Long Beach and New York. Further, Los Angeles / Long Beach is a COVID hot-spot and port-worker absenteeism is extremely high – Meanwhile, commercial inventories are tight: Census Bureau’s Ratio of On-Hand Goods vs. Sales fell from 1.68 in April (when stores were closed) to 1.2 in December and retailers are now shipping from Asia to restock for Spring ▪ Severe congestion is resulting at ports on both North American coasts due to this situation is expected to persist for several weeks into 2021; COVID-19 infection rate among Longshore Workers is growing – In mid-January over 60 container ships were at-idle off the coast of Southern CA awaiting off-loading – Container ships are currently booking at 150% capacity in Asia - US trade lanes – 1,800 Port of LA – Long Beach are off-the-job in late January, infected with, or isolating from, Coronavirus. ▪ US trucking tonnage annual index spiked at the end of 2020, recovering to 3% below pre-pandemic level.

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