Transfix Take Podcast | Ep. 22 – Week of Oct. 6
Opening of Q4 Marked by Market Shifts
Q4 should bring new peaks to reach, as the market attempts to clear different bottlenecks in the supply chain. The last week of September saw rates increase across the board, mostly due to the change in freight volume mix, which we discussed a couple of weeks ago. This was most noticeable on the West Coast, which saw the largest climb in rates, following an increase in volume and a shift to longer length hauls. Surprisingly, as the engines were firing up on the West Coast, we saw a decrease of available volume in the Midwest and Northeast following weeks of being the tightest markets. Average rates in all regions were elevated by the end of both the month and the quarter. In the coming weeks, we expect the market to continue to see the traditional stress we typically experience in October and November, but it will be intensified by the ongoing bottlenecks, which only seem to be getting worse.
The shift to longer hauls that we are seeing on the West Coast creates a lot of capacity displacement and has domino effects on other markets. Moving more volume at longer lengths only exacerbates the bottleneck on capacity, with each asset tied up longer per shipment. In the short term, we anticipate more favorable rates for shippers in the South and Southeast coming off the end of the quarter. However, we expect capacity to remain tight — especially in large warehousing and port markets. With rail capacity fighting their own constraints, we have been seeing some of the major rail lanes become the hottest trucking lanes, including L.A. to Harrisburg, L.A. to Chicago, Atlanta to Chicago, and Harrisburg to Chicago.
“U.S. spot truckload rates have reached a high plateau and are poised to climb even higher, propelled by high import volumes and strong manufacturing and consumer demand,” William B. Cassidy writes for JOC.com. “Rates are rising in key long-haul lanes, as freight flows from coastal warehouses and storage facilities further inland to distribution centers in Chicago, Memphis, and other mid-U.S. markets.”
Preparing for the New Next
As big-box stores chartering their own container ships becomes the new normal, shippers are generally trying to think outside the box to bypass myriad constraints. The ongoing labor shortage is still of great concern, with one of the largest package handlers reporting delays of hundreds of thousands of packages. Consumers are beginning to feel this impact directly when it comes to purchasing goods online and in grocery stores. The next few months likely will bring further constraints to capacity in every sector of the supply chain, which could leak through to 2022, as William and I discussed in our State of Freight episode of the Transfix Take Podcast. With dozens of ships sitting off the shores of both the U.S. and Asia, we expect delays likely will get worse until the market stabilizes and constraints — including the lack of chassis, containers, and labor— get resolved. Much like last year, we expect we are in for a volatile next few months.
This atypical market has been in place for more than a year. Shippers will need to consider embracing change in their supply chain operations and look toward partners who can support them with proven solutions. We are just at the start of the elevated peak season, making it more important than ever to take a step back and prepare while staying up to date on factors that may affect specific supply chains.
Fuel Prices Surge
The average price for gasoline in the United States reached its highest average since 2014 during the week ending Sept. 27, according to the U.S. Department of Energy.
Marking a 2.1-cent increase week over week, the national average for a gallon of on-highway diesel hit $3.406. The most significant increase was in the Midwest, where prices jumped by 3.6 cents. California claimed the country’s most expensive diesel at $4.339 per gallon, Logistics Management reports.
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.