Volumes Continue Seasonal Surprise

Typical seasonal trends are proving a poor harbinger of what is to come in the freight industry. “Volumes have increased slightly through this week, but they look to be leveling off at almost 20% higher, year over year,” says Justin Maze, Transfix’s senior carrier account manager. “It’s hard to know how long this will last, since normal seasonality trends would have shown us a week of decreasing volume. We have seen quite the opposite.”

Tony Mulvey of FreightWaves concurs: “Freight brokers we spoke to were surprised that trucking markets did not meaningfully cool off after July 4 and are increasingly convinced that freight patterns this year will continue diverging from historical seasonal patterns. In our view, substantial capacity destruction in 2019 and 2020 has made markets more sensitive, and the unpredictability of freight demand in the pandemic has made capacity allocation less efficient, effectively removing capacity from the market and raising spot rates.”

FreightWaves’ Outbound Tender Volume Index (OTVI) currently sits at 12,592 and shows little evidence freight volumes will fall off in the coming weeks. Looming lockdowns are predominately targeting service-based industries that do not move a large percentage of the nation’s freight, Seth Holm writes. That, combined with strong consumer demand, a good housing market and the rebound of manufacturing, show carriers in their strongest positions since 2018.

 

Tender Rejections Remain High, Push Up Rates

Tender rejections also continue to be higher than pre-July 4; the Outbound Tender Reject Index (OTRI) climbed to 16.55% and is trending upward.

“Upward pressure on rates has been driven largely by Texas and Los Angeles,” Maze says. “Recently, though, we have even seen other major freight markets that were previously left behind, such as Chicago and Harrisburg, with increasing tender rejections. Carriers can get high-paying spot rates going just about anywhere now. We expect next week to follow a similar path, with carriers continuing to reject contract freight and move highly lucrative spot fright, as volumes remain well above historical highs.”

Predicting the market is extremely tough, so Transfix continues to dive into multiple data points, including maritime data, to shape how we think the markets will proceed. “As port volume from China increases and ocean cargo shipping rates continue to soar, we believe Los Angeles and neighboring markets will maintain high truckload freight volumes and could see an additional increase in mid-August,” Maze says.

 

ATA Report Looks Back at Trucking, 2019

The trucking industry was in solid shape heading into the pandemic, according to the American Trucking Association’s ATA Trucking Trends 2020, which was released last week. While 2019 numbers did not quite live up to the height of 2018 numbers, it was still a strong year.

The report said the trucking industry collectively moved 11.84 billion tons of freight last year, a 3% year-over-year increase from 2018’s 11.49 tons. Trucking generated $791.7 billion in revenue in 2019, a slight decline from 2018’s $797.7 billion. The trucking industry employed 7.95 million people in 2019, an increase of 140,000 from 2018.

 

With the uncertainty and volatility surrounding the US economic recovery, shippers need a partner that can help them adapt and excel in uncertain times. Transfix’s leading technology and reliable carrier network were specifically developed to help shippers adapt to changing transportation needs. As a part of our ongoing market and COVID-19 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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