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.
States Begin To Re-Open, Creating Uncertainty
According to the Washington Post, more than 100 million Americans are now free to move outside their homes. As states begin to implement new protocols and lift previous stay-at-home orders, businesses of all sizes and the trucking industry will begin to feel the change. The timeline for that impact, however, is unclear and early reports indicate that freight volume has only seen a slight uptick in the past week. “Unfortunately for freight volumes, most of the businesses reopening are service-based and do not move much freight,” said Andrew Cox, a research analyst at FreightWaves. The Transfix team continues to closely monitor the reopening process state-by-state, sharing new regulations and information with our network of shippers and carriers. We remain well-positioned to provide timely capacity to shippers when freight volume increases in the second half of 2020. Our carrier network was specifically developed to provide flexibility in tight circumstances such as those brought about by COVID-19 and to regions impacted by seasonal swings in freight volume.
Ports And Rail Awaiting Bounceback
Historically low rates have impacted carriers in the past two weeks and volume concerns have been felt throughout the entire supply chain, most notably in rail and imports.“The container shipping industry has spent the past month in the eye of the storm [and will] now face the full impact of the international spread of COVID-19,” wrote Maritime Strategies International (MSI) in its latest monthly outlook. The British-based consultancy is currently predicting an “uneven recovery in mainline volumes in the third quarter.” An entire industry returning to pre-COVID-19 production wouldn’t be enough on its own to materially impact the domestic supply chain, according to MSI.
“Consumer retail goods are of course a huge driver of containerized trade, but their share of overall volume is sometimes overstated. Machinery, parts, semi-finished materials, and chemicals all hold a significant share of the volume. Industrial production will likely be an early sector to return to normal output, but again, there will be differences: Goods tied to the construction industry may return relatively soon, but auto parts—hugely important on certain trades—could well see a prolonged period of subdued demand.” – MSI Monthly Outlook
Rail freight fell 22% in April year-over-year, but according to a report from Moody’s the market is beginning to stabilize. Moody’s indicated that with states reopening for business, that rail market has likely found its floor. The pace of a true recovery, however, looks less promising. Moody’s closed its report by noting “…we anticipate that rail freight volumes will remain well below last year through the fourth quarter.”
National Tender Rejections Increase
According to FreightWaves, outbound tender rejections increased week-over-week for the first time since late March. The media outlet’s Outbound Tender Reject Index (OTRI) illustrates the market’s wild ride in the past two months.
With volumes low, capacity has remained loose on a national scale, but according to FreightWaves Andrew Cox that doesn’t mean every shipper will remain in an advantageous position moving forward. “The reopening of some industries and the produce harvests will tighten capacity in pockets,” remarked Cox over the weekend. The Transfix team will be closely monitoring produce season and the reopening of major U.S. auto suppliers on May 18th. If the reopening of the auto market goes smoothly, other manufacturers will have a blueprint to utilize as they ramp back up in the coming weeks.
As a company, we remain committed to providing critical services to our customers during this crucial time. For more on COVID-19’s impact on the freight market, please refer to our website, blog, social channels, and via email.