The Coronavirus has dominated headlines for weeks, impacting virtually every aspect of daily life both domestically and abroad. Foreign governments have taken drastic steps to contain the spread of the virus including full-city quarantines, public school closures and the implementation of extensive travel restrictions. These precautions have impacted foreign production and as a result have reduced the amount of goods being imported into the United States.
As overseas production has slumped, activity at U.S. ports has naturally experienced a steep decline. Credit Suisse Group AG analyst Allison Landry noted in late February that plummeting imports will undoubtedly “drive sustained weakness” in demand for domestic trucking and intermodal service moving freight long distances by truck and rail.
The coronavirus impact is pushing back prospects for a recovery in U.S. freight demand https://t.co/EngHPQ3tnl
— Real Time Economics (@WSJecon) February 28, 2020
According to official statistics provided by the Port of Los Angeles, the nation’s busiest seaport has reported five consecutive months of negative year-over-year import volume dating back to September. This is the first instance of a sustained five-month downturn since 2013. Gene Seroka, the executive director of the Port of Los Angeles, confirmed last week, ahead of the Port’s official release, that February marks the sixth consecutive month of negative volume (-15%). “(It’s) a pretty tough start to the year, and we think that is mostly attributable to the coronavirus,” Seroka said in an interview at Bloomberg’s headquarters in New York.
These problems are not isolated to Los Angeles with ports in Maryland and Georgia reporting “significant and unprecedented” reductions in volume. Ports in both states have begun cutting back hours of workers.
During an interview with Bloomberg Radio, Seroka indicated that the reduced import volume is just one variable impacting the industry. “There is a glut of containers in the U.S., both full and empty ones waiting to return to Asia,” Seroka said. He continued, “those will need to be moved rapidly once the supply chain starts to return to normal, potentially creating bottlenecks and other problems.”
Seroka’s final point has been echoed by media outlets in the industry. Chinese production is now being ramped up again to make up for lost time, which means that U.S. shippers will soon be seeking carriers to replenish their facilities in the coming weeks and months. This strain on the entire supply chain will be felt acutely by domestic shippers.
Transfix recently debuted “Dynamic Lane Rates” an offering geared to help shippers tame volatility. A common experience for shippers is that when a contracted carrier rejects one of their loads, a coordinator would have to put that load up for auction. They would then email freight brokers, request a rate for that particular lane and then wait. In the end, they would spend hours trying to find the best quote to cover the lane.
Dynamic Lane Rates (DLRs) allow coordinators to know the guaranteed rates for their lanes every morning without needing to put the load up for auction or emailing us. When a contract carrier falls through, they can first refer to our Dynamic Lane Rates spreadsheet before going to the spot market. Coordinators have reported saving over three hours a day, while lowering their operational spend.
With the market expected to tighten in Q3 and Q4 of 2020, tools like DLRs can provide shippers with increased efficiency, visibility into the market, and ultimately the opportunity to lower costs by accessing the best rates available on a given lane.
If you believe that your business could benefit from Dynamic Lane Rates, please fill out this form and we’ll reach out to get you set up!