Transfix Take Podcast (Week of Aug 16)
Freight Market Steady as Imports Wait to Move
No major changes in the freight market last week, so shippers should continue to take advantage of the current market — especially in the West, South and Southeast, which have more favorable capacity. The Midwest and Northeast are still tight and more favorable for carriers. We don’t expect the Northeast to loosen any time soon. Record imports into the NY/NJ port will only cause the truckload market to tighten. These high-import volumes come as more shippers reroute volume to the East Coast due to continued congestion on the West Coast.
The National Retail Federation (NRF) believes August will be a record retail import month. This is ahead of the peak retail season, as shippers push to get inventory here in preparation for congestion and shipping delays similar to the past 12 months. The big question is: When will this freight hit the road and start moving on trucks? We are already seeing it in the Northeast, so prepare to see it spread across all major port markets soon. Volume has really started increasing on the West Coast, but primarily on local and short hauls, which is why we have not seen a larger impact on spot rates. In the coming weeks, we will start seeing more freight hitting the spot market, as shippers move to reposition inventory for the peak season.
With contract and spot rates continuing to increase even with lower volumes and rejections, it’s clear the market still cannot handle current disruptions and the imbalance of supply and demand. This will continue to be the new normal as we move through the end of 2021.
Infrastructure Bill and COVID May Have More Consequences
The U.S. Senate passed the $1 trillion infrastructure bill, which “includes several provisions related to trucking, including a mandate for automatic emergency braking systems on trucks and a requirement for an under-21 truck driver apprenticeship pilot program,” Overdriveonline.com reports. It does not include an increase to carriers’ liability insurance minimum requirements, nor does it contain funding for expanding truck parking capacity.
The bill also is likely to affect the current driver shortage, because the transportation industry’s largest employment competitor is the construction industry, and the new bill will create more high-paying jobs in construction. Carriers, who are already struggling to fill drivers’ seats, will have even more competition for workers.
For the past several weeks, we have been talking about how the pandemic in other parts of the world could affect U.S. freight markets. This past week, we saw a glimpse of what the delta variant may have in store. On Wednesday, the world’s fourth largest port, China’s Ningbo, was closed down due to a worker being infected with the variant. We saw a similar scenario play out a little more than a year ago, when imports fell to extreme lows, then rebounded to extreme highs. We are still dealing with those disruptions today. We will continue to see shifts in ports of entry and new lanes from shippers, as they adjust to new pandemic-fueled freight flows.
More unknowns are happening every day around the COVID-19 pandemic, and we know this translates directly to unknowns in the freight market. The pandemic’s unpredictable disruptions are probably not over. Transfix is here to help our carrier and shipper partners prepare. We are continually monitoring even tangentially related markets and data to develop the most forward-thinking perspective on the future freight market.
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.