Transfix Take: Weekly Market Update (Nov. 16)
Volumes, Rejections, Rates Reach Peak
The peak holiday season is in full effect. Tender volumes, rejections and, most notably, rates have been driving upward again. Rates have seen the most impact after falling through the final two weeks of October.
“We started November with rates at $2.83 per mile (Truckstop 7-day average), and these have steady risen to a current $2.92 per mile,” Justin Maze, Transfix’s senior manager of carrier account management, says. “Truck capacity is getting crunched again, as shippers stock up for the holiday season.”
The Logistics Managers Index (LMI) puts inventory levels at highs surpassing any level during the past 2.5 years — particularly amazing, considering they came off record lows. This is one of the direct causes of the bustling freight market.
Southern California markets were extremely strong this past week, especially with long hauls, presenting a possible domino effect similar to what we saw a few months ago. Capacity is being pulled to and from different places, as it is needed, through spot freight, with shippers scrambling for capacity.
National tender volumes rose this week by 1%. On an accepted tender basis, volumes are now running up 30% YoY, up from 24% last week, Seth Holm reports on Freightwaves.
Carriers are very optimistic about the outlook for 2021. Large and mid-size fleets continue to struggle to recruit drivers, but they are leaning on increasing trailer capacity to operate more efficiently — though there is a trailer backlog, as they are in such high demand.
“Predicting the future after the holidays is still a shot in the dark,” Maze says. “One of the biggest factors of continued industry disruptions is COVID-19. Cases are rising, and lockdowns are looming, just as some freight sectors, including industrial, start to pick back up. Imports remain strong (see below), so it’s clear shippers will continue to restock after the holidays, as many move away from ‘just in time’ inventory levels.”
Many of Transfix’s shippers tell us they are back-stocking inventory to ensure they have what they need on-hand, as new coronavirus shutdowns become reality; some larger shippers are already seeing consumers stocking up again on staples such as water.
NRF Predicts Record Import Season, Then Slowing in December and January
While peak season 2020 looks like it will be one of the strongest in history, the National Retail Federation (NRF) predicts U.S. import growth will soften at the end of 2020 and beginning of 2021.
With most holiday merchandise already in the country, U.S. imports in December are projected to decrease 8.2% YoY, and those in January 2021 are expected to decline 3.7% YoY, according to the monthly Global Port Tracker report from the NRF and Hackett Associates. Import growth should resume beginning in February (the projected increase is 0.9% YoY), as import volumes will be compared with the plunge in imports when factories in China shut down in 2020. March imports should rise 15.7% from March 2020 — the month the pandemic first fully affected the United States.
The NRF reports that July–October U.S. imports increased some 6.1% YOY. “Part of this surge was fueled by restocking after retail sales rebounded this summer, and part could be making sure there aren’t shortages if we see panic buying again,” Jon Gold, NRF’s vice president of supply chain and customs policy, said. “The economic challenges of the pandemic aren’t over yet, but this clearly shows how an industry that has been under stress is fighting back in a positive way. Retailers don’t import merchandise they don’t think they can sell, so this is a good sign for the holiday season.”
With the uncertainty and volatility surrounding the U.S. economic recovery, shippers need a partner that can help them adapt and excel — no matter the circumstance. Shippers turn to Transfix for our leading technology and reliable carrier network. As volumes drive higher, we are here to help: Learn more about our Core Carrier program and Dynamic Lane Rates. As part of our ongoing market coverage, we’ll continue to provide breaking news, resources and insight into emerging trends and the pandemic’s impact on the transportation industry.