As a part of our on-going COVID-19 coverage, we’ll be providing breaking news, resources, and insight into the pandemic’s impact on the industry.
Second Round Of Stimulus Passes, More On The Horizon
On Friday, April 24th, the President signed into law H.R. 266, also known as the “Paycheck Protection Program and Health Care Enhancement Act.” The $484 billion Coronavirus Relief Bill is set to replenish the coffers of the original small-business loan program rolled out as part of the CARES Act. The Payroll Protection Program (PPP) and the Economic Injury Disaster Loan program (EIDL) both ran out of money just days after they were announced, leaving many small business owners scrambling. H.R. 266 has earmarked $310 billion for the PPP and $60 billion for the EIDL.
For carriers and shippers interested in learning more, you can access executive summaries of each program and direct links to lenders through our recently published relief bill recap blog post.
We are closely monitoring future legislation nationwide that may impact both shippers and carriers. The financial support currently being proposed by Senator Josh Hawley (R-MO), if successful, could have a massive impact on the domestic supply chain. According to Jim Tankersley and Emily Cochrane of the New York Times:
“(Hawley) has spent the month working to build support for his proposal to preserve the country’s workforce, which would have the federal government directly cover 80 percent of wages through refundable payroll tax rebates and provide rehiring bonuses for the duration of the pandemic.”
The speed at which legislation is now moving through the House and Senate indicates that there is an appetite for aggressive proposals such as Hawley’s. He was later quoted in the NYT’s saying, “there’s certainly a dawning bipartisan awareness that the depth of the economic crisis we find ourselves in is very deep indeed.” The Transfix team remains committed to providing critical services to our customers during this chaotic time, which includes helping our carriers and shippers understand new legislation.
Freight Volume Flattens, Carrier Capacity Uncertain
In terms of pricing power, it is not constructive to either shippers or carriers when volumes are this low. So, to grasp where the power is in this underperforming environment, we must look to pre-crisis capacity, which was already excessive. Although we believe bankruptcies and company failures will accelerate during the second quarter, capacity is still very loose right now. Until volumes pick back up, or a swath of drivers leave the market, that environment will remain.
– Seth Holm, Senior Research Analyst for the Freight Intel Group at Freightwaves
Freight volume remains stagnant, now 8% below 2019 levels for the last two weeks. This correlates to the historically low Outbound Tender Rejection Index. But what is most striking in Holm’s reporting on Saturday is the final statement he makes in the quotation above. Right now pricing power is increasingly in favor of shippers, but carrier bankruptcies and potential driver strikes could change market conditions in a short period of time for shippers around the country. As a digital freight broker, Transfix remains well-positioned to provide capacity during these turbulent times. Our carrier network was specifically developed to provide flexibility in tight circumstances such as those brought about by COVID-19.
With small and medium-sized carriers hurting financially, Transfix’s CEO Lily Shen penned an op-ed for Transport Topics urging state and federal authorities to ensure market stability.
“At this time, leaders within our community need to urge our elected officials to properly value the drivers of America by providing an economic backstop so that they don’t have to battle insolvency, while simultaneously delivering life-saving supplies coast to coast. As true heroes, in the same vein as the doctors, nurses, and first responders on the frontlines, carriers deserve the immediate and comprehensive support needed to continue safely and effectively doing their jobs.”
For more on COVID-19’s impact on the freight market, please refer to our website, blog, social channels, and via email.