Volumes Driving Higher
Volumes and rejections keep driving upward, swerving from traditional seasonal trends. Volumes continue to truck on at record highs — up 25% YoY. Internally, Transfix is experiencing the tightest capacity from markets in the Northeast, Midwest and South. Rates and volume still remain extremely high in California, but they are beginning to level.
“Volumes will remain steady,” says Justin Maze, Transfix’s senior carrier account manager. “Rejections will continue to slowly climb leading into Q4, where we could see capacity get crunched even more, as holiday shipping kicks off. Retail sales have been the main driver on volume, and the holidays could further increase this.”
The Outbound Tender Volume Index (OTVI) increased another 2.4% this week, resting at 12,894. OTVI has crossed into uncharted territory by climbing higher than the March panic-buying spree, and higher than both 2019 and 2018 levels, according to Freightwaves.
Both the uncertainty of the next round of fiscal stimulus and threats of increased lockdowns due to roaring COVID-19 numbers are surely on both carriers’ and shippers’ minds, as they have the ability to reroute increasing numbers.
Tender Rejections Keep Climbing
“Tender rejections will also remain high, as supply chains are still disrupted; carriers are leaning on more lucrative spot freight and rejecting their contract commitments,” Maze says. “Shippers are certainly feeling the pain, as carriers will not return to their rejected freight any time soon.”
Seth Holm of Freightwaves concurs: “We should expect to see tender rejections in the double-digit range, as long as volumes stay elevated — all signs point to this happening (especially if another round of stimulus is announced).” The Outbound Tender Reject Index (OTRI) sits at a high level for a third week in a row, at nearly 18% and rising.
ATA, ATC Reflect June Upswings
The American Trucking Associations’ (ATA) advanced seasonally adjusted For-Hire Truck Tonnage Index increased 8.7% in June after falling 1% in May.
“Not surprisingly, as more states lifted restrictions in June, truck tonnage was robust,” ATA Chief Economist Bob Costello said. “While the gain in June was the single best month since January 2013, the solid gain was not enough to put tonnage back to pre-pandemic levels, but it is close. I am hearing good anecdotal freight reports for July, but I am concerned that freight could slow as more states reinstate restrictions due to increasing coronavirus cases.”
Similarly, the preliminary Americas Commercial Transportation (ACT) For-Hire Trucking Index in June rose to 70.4, up from 50.2 in May and 19.3 in April.
“The survey confirmed much of what we witnessed in rate data over the course of June, as the supply-demand balance tipped in truckers’ favor as the economy reopened,” Kenny Vieth, president and senior analyst for ACT Research, said. “While encouraging, we would note some transitory risks, one being the economic strength in May and June was heavily subsidized by Congress and the Federal Reserve. Additionally, June’s strong rates benefited from parked trucks and laid-off driver capacity.”
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.