Riding a Seasonal Trend out of 2020
We have been riding a December seasonal trend and, as shippers wind down for the holidays, volumes declined during the past week. Tender rejections are up and capacity is down, with drivers coming off the road.
This is the first time we are really seeing traditional seasonal trends since the beginning of the pandemic, but everything is still at very heightened states. Volumes are 30+% higher YoY, rejections remain more than doubled YoY, and rates are still 70+ cents higher on average YoY.
“We expect the market will continue following seasonal trends through the remainder of 2020, but not as we turn into 2021,” Justin Maze, Transfix’s senior manager of carrier account management, says. “The outlook is strong, especially for January, which is usually when the industry idles. Imports are very strong and show no signs of slowing in the next few months. Warehouses are still having capacity issues.
“Shippers also have continued expectations of high volumes for the foreseeable future. Our carrier partners agree, and we are working together to create the solutions shippers need to operate at the most efficient level, as they deal with capacity issues and the driver shortage.”
Holiday Season Was as Long as it Seemed for Retailers
Much like the entire year, 2020’s holiday season seemed very long. That was confirmed by data from Mastercard SpendingPulse, which tracks overall retail spending across all payment types.
“SpendingPulse compared the ‘75 days of Christmas’ (Oct. 11–Dec. 24) in 2020 to the same 75-day period in 2019 and found total retail, excluding auto and gas, rose 3%. The ‘traditional’ holiday shopping period of Nov. 1–Dec. 24 saw a 2.4% increase, with e-commerce sales up 47.2%,” Brian Straight reports for Freightwaves.
Online spending accounted for 19.7% of all retail sales, a 6.3% increase from 2019, Mastercard says. Black Friday was the top spending day of 2020, though sales on that day declined 16.1%, likely because retailers started offering Black Friday–type deals earlier this year.
On the Cusp of More PPP: Will Truckers Qualify?
As part of the newly signed COVID relief bill, small businesses will have new access to Paycheck Protection Program (PPP) loans.
Overdrive reports: “For companies that received PPP funding in the first round, they can apply for a second loan of up to $2 million, as long as they have fewer than 300 employees, have used or will use the full amount of their first loan, and can show at least a 25% drop in revenue in any 2020 quarter compared to the same quarter in 2019, according to the Journal of Accountancy.”
First-time applicants with fewer than 500 employees are also eligible for the loans.
The quarterly YoY drop may come in to play for many trucking companies, Freightwaves’ John Kingston points out. With such a strong year for many in the industry, showing a 25% loss in revenue compared with a corresponding quarter in 2019 could be difficult, meaning many truckers may not qualify for a new loan.
According to Kingston, some key changes between the first and second rounds of PPP include:
- “The top size of the loan for second-time borrowers under PPP will be $2 million. In the first round, loans could go up to $10 million. A first-round borrower can’t get a second round of PPP loans if it has not used up the receipts from round 1. The first-round limits of 500 employees and a $10 million loan remain in effect for companies that did not receive first-round money.”
- The number of employees that can be used as the base for the loans has been reduced from 500 to 300.
- Business expenses that are paid with PPP loans will now be tax-deductible.
While the site has not yet been updated for the new round of PPP, keep an eye on the U.S. Small Business Association website for information.
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.