Atypicality Likely Won’t End With End of Year

As we ride into the final two weeks of the year, we will see lower volumes followed by higher rates, similar to the trend we saw during Thanksgiving week. This most likely will be another record-breaking week on our drive out of 2020.

Indeed, national tender volume fell more than 5% last week, now down more than 15% since Thanksgiving. The Outbound Tender Volume Index (OTVI) sits at 14,515.

“As Christmas approaches, capacity will get tighter, and it will remain tight through the end of the year,” Justin Maze, Transfix’s senior manager of carrier account management, predicts.

“In a year in which seasonal patterns have been ignored and chaos has reigned, volumes are actually following a seasonal path into the Christmas holiday, albeit at a much higher level than normal,” Seth Holm writes for FreightWaves. The elevated level is being supported largely by high retail spending, with total retail sales up 4.1% YoY in November, but down 1.1% from October of this year.

“Economists said the retail declines were ‘warning signs’ that the economy was entering a rough patch and in need of a jolt from another round of government stimulus,” Holm writes.

Rejections Up Again

“The week between Christmas and New Year’s Eve is the most common vacation time in the U.S.; it’s no different for the supply-chain workforce,” Maze says. “Volumes will remain lower, but with more capacity taken off the road and some capacity staying more localized for the holidays, this will force up rates and could make for very tight markets, especially for mid and long hauls.”

With drivers seeking freight that will take or keep them closer to home, the Outbound Tender Reject Index (OTRI) moved significantly higher last week, settling at 26.75% on Friday. This week’s levels could challenge the index’s Thanksgiving highs.

As we leave 2020 behind, markets are still unstable, and many questions remain about next year. January 2021 is likely to be as atypical as 2020, without the usual lowering of rates the month usually brings. Imports only show signs of strengthening, and rail rates are not easing either, as they normally would around this time of year.

“While much of the buzz out there is about the vaccine, in my opinion, the driver shortage should be receiving more attention,” Maze says. “Carriers continue to increase driver pay, but there are no more drivers arriving. Schools are still shut down or operating at limited capacity, but if rates continue to rise, we could possibly see drivers who left the field re-enter to provide a little relief.”

 

Shippers Need to Plan, Collaborate to Move Products in 2021

Shippers are not in the driver’s seat right now when it comes to getting their goods delivered. “The volatility, tight capacity and labor shortages brought about by the COVID-19 pandemic are affecting transportation across the board,” William B. Cassidy writes for JOC.com.

“The major parcel carriers in the U.S. are putting capacity valves on shippers,” John Janson, global logistics director at apparel importer SanMar, said. “They’re looking for better customers, not bigger customers, and there are a lot of people on the sidelines right now who are not able to move products. For parcel carriers, if you’re adding more packages per stop, you’re desirable [as a shipper]. If you’re adding more stops, you’re not.”

With carriers struggling to meet demand for many reasons, including a lack of drivers and equipment, capacity will not go up measurably any time soon. But it is pretty certain that rates will continue at high levels. In today’s environment, supply chain success is a team sport. Reliability, flexibility and proactive problem management can be make or break for the customer experience — and the bottom line. That’s why Transfix prides itself on our high-quality carrier network, ability to dynamically scale capacity and tech-driven ability to provide proactive exception management.

 

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.

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