Holiday Season in Full Swing, California Leads Way in Rising Rates

The past two weeks brought increased truckload rates throughout the country, as well as tight capacity caused by Thanksgiving and the end of the month. Spot rates out of California gained even more momentum, increasing by 15 cents on average, according to DAT. Freight lanes from Southern California to major warehousing markets on the West Coast continue to favor carriers, and we saw new record-high rates on the Southern California to Phoenix lane. November looseness in the Midwest was short-lived, and shippers likely will face tighter capacity through the remainder of the year. Surprisingly, we saw markets in Florida heat up last week with tightened capacity and a higher average spot rate on freight leaving the state. 

This week should see trends from the latter half of last week continue. We expect markets in the Northeast and Southeast to jump back to the trend we saw in November, with softening capacity leading to easing rates. We do not believe this will last, so shippers should try to take advantage of this soon. Starting the week of Dec. 13, freight markets throughout the country likely will tighten, as shippers push out more freight ahead of the holiday week. The closer to the holiday we get, the more spot volume will come to the market, putting more pressure on rates, which are likely to increase for the remainder of the year. 

For months, retailers worked to replenish inventories in time for Black Friday and holiday shopping season by pulling forward inventories through supply-chain bottlenecks. While Black Friday sales figures were down, retail spending for November was up 13.6% year over year, according to Retail Brew

“For the first time ever, Black Friday saw a reversal of the growth trend of past years,” Vivek Pandya, lead analyst at Adobe Digital Insights, said in a statement. “Shoppers are being strategic in their gift shopping, buying much earlier in the season and being flexible about when they shop to make sure they get the best deals.”

Some of the largest retailers were able to outperform YoY inventory levels. Still, inventory-to-sales ratios remain low, and inventory replenishment time has not eased.

“Retailers have been ordering merchandise much earlier than normal this year to meet what is expected to be record holiday demand and to avoid dislocation in the supply chain that is causing shipment delays,” Todd Maiden wrote for Modern Shipper. “The group incurred higher freight costs to do so, with some even bearing the expense of chartering their own container ships to guarantee the stock needed for the biggest buying season of the year would be on the shelves. The pull forward of inventory further boosted the year-over-year comparisons to depleted inventory positions from a year ago.”


Are Port Bottlenecks Easing?

Southern California ports have been reporting decreases in the number of ships anchored at bay, but these numbers may be misleading. New policies were put in place to keep ships waiting farther out at sea, drifting instead of anchoring in the bay. The number of ships waiting to dock and unload in Southern California still sat at 73 on Dec. 3. That inbound freight will keep the market in California tight, and ultimately, a portion of this will hit the market to be moved over the road. 

Bottlenecks have not disappeared, and shippers continue to navigate new ways to meet their transportation needs and build a more sustainable supply chain. Recently, we have seen some retailers going so far as to buy truckload carriers, the latest being Ashley Furniture’s acquisition of Wilson Logistics. 

Top of mind for everyone in the supply chain right now is the new COVID variant. We’re keeping an eye on how it is affecting things overseas, as whatever happens will ultimately affect the U.S. supply chain.


ISM: Manufacturing Marks 18th Month of Growth

U.S. manufacturing increased in November, according to the Institute for Supply Management’s (ISM) Manufacturing ISM Report on Business. The ISM Purchasing Manager’s Index (PMI) for November registered 61.1%, an increase of 0.3 percentage point from the October reading of 60.8%. The PMI, a monthly survey of supply chain managers across 19 industries, is a measure of the direction of economic trends in manufacturing. An index higher than 50% indicates growth, so the November reading marked an 18th consecutive month of expansion. New orders, production and employment numbers all grew in November, as well.

“The U.S. manufacturing sector remains in a demand-driven, supply chain–constrained environment, with some indications of slight labor and supplier delivery improvement,” said Timothy Fiore, chair of ISM’s Manufacturing Business Survey Committee. “All segments of the manufacturing economy are impacted by record-long raw materials and capital equipment lead times, continued shortages of critical lowest-tier materials, high commodity prices, and difficulties in transporting products.

“Manufacturing performed well for the 18th straight month, with demand and consumption registering month-over-month growth, in spite of continuing obstacles. Meeting demand remains a challenge, due to hiring difficulties and a clear cycle of labor turnover at all tiers. Panelists’ comments suggest month-over-month improvement on hiring, offset by backfilling required to address employee turnover. Indications that supplier delivery rates are improving were supported by the Supplier Deliveries Index softening. Transportation networks, a harbinger of future supplier delivery performance, are still performing erratically.”


The movement of freight is changing in every mode, as shippers do their best to keep up with record demand while fighting congestion at multiple points throughout the supply chain. Shippers who think forward, use data and think outside the proverbial box on solutions, while partnering with companies such as Transfix, will come out of this ongoing freight rally in a better position and well ahead of competitors. The one huge win through this pandemic has been speeding up the digital transformation of the transportation industry.

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.


This communication may contain certain forward-looking statements that are not statements of historical facts. All such statements are based on current expectations as well as estimates and assumptions that, although believed to be reasonable, are inherently uncertain. These statements involve numerous risks and uncertainties, and actual results may differ materially from those expressed in any forward-looking statements. We undertake no obligation to update or revise any of the forward-looking statements contained herein, whether as a result of new information, future events, or otherwise.

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