Tender Volumes, Rejections Continue to Rise
Tender volumes continued to increase for the fifth week in a row, according to Freightwaves. And while capacity has been gradually tightening across the country, for the current volume level, capacity has been slow to react.
The outbound tender volume index (OTVI) has been rising since Memorial Day. Currently 11,229.68, OTVI is now down only 12% from an all-time high in March. National tender volumes have risen 2% since last week and more than 14% month-over-month, pushed by the van segment. The Southeast and the Southwest have driven freight volumes during the past week, while the West Coast has slowed.
Outbound tender rejections have also increased week-over-week for the sixth week in a row, with gradual tightening of capacity. Overall tender rejections are up nearly 10% week-over-week for the second week in a row.
Produce Season Driving Up Spot Rates
The length and unpredictability of the produce season, due to growth, planting cycles and weather, pushes much of the produce freight to the spot market or short-term pricing bids. Spot rates for produce are now averaging above 2019 by as much as 15%, according to USDA surveys. This trend might seem surprising, given the impact of COVID-19 pushing freight volume to its lowest levels in more than a decade, but these findings are in line with Transfix’s predictions, published June 8.
Justin Maze, Transfix’s senior carrier account manager, concurs: “Combining a strong produce season with the country reopening has pushed volumes and rates up across almost every state. Internally, we have seen a steady increase in volume from non-essential shippers, as the economy is gearing up, and businesses are opening. We have seen a huge upward movement in the first two weeks of June, though we are starting to see some states, such as Florida, level off.”
“Many reefer carriers will abandon contracted freight to cover the produce, because the operating margins can be so much higher, thus putting upward pressure on rates in the non-produce sectors, as shippers lose their carrier options,” Zach Strickland writes for FreightWaves. This is one reason why the Outbound Tender Reject Index is rising.
Our TrueRate pricing algorithm and instant pricing, along with our carrier network, was specifically developed to provide data insights and flexibility in changing circumstances across the country. We are ready to help shippers with increased freight volume and competitive rates in the coming months.
Trucking Job Loss in May is Improvement Over April
The U.S. economy seems to have bounced back slightly in May, but the transportation sector, including the trucking subsector, is still suffering, LandLine.com reports. While trucking company bankruptcies have been fewer than expected, perhaps in part due to trucker headcount reduction, the sector has been hit hard from a jobs perspective.
“April’s trucking jobs loss was the largest since the bureau began tracking the subsector in 1990,” Tyson Fisher writes. “To date, trucking employment is down nearly 95,000 jobs, due to April’s downward spiral. At about 1.4 million jobs, this sets trucking employment back to numbers last seen in November 2014, erasing more than five years of job growth.”
However, the trucking subsector experienced a modest job loss of around 1,000, after losing nearly 90,000 jobs in April. The Bureau of Labor and Statistics (BLS) also reported hourly earnings for the “transportation and utility” sector did rise very slightly, according to preliminary numbers, putting them at an all-time high.
Jason Miller, an associate professor of supply chain management at Michigan State University, wrote on his LinkedIn page about the BLS trucking report: “The good news is that it appears that job losses have bottomed out, so we should start to see an uptick (albeit likely far more slowly than the precipitous drop).”
With the unreliable pace of US economic recovery, shippers need a partner that can help adapt capacity in uncertain times — no matter how long they remain. Our carrier network was specifically developed to provide flexibility in changing circumstances across the country.
The Transfix team will be monitoring COVID-19’s impact on rates and volume. As a company, Transfix remains committed to providing critical services to our customers during this crucial time. For more on COVID-19’s impact on the freight market, please refer to our website, blog, social channels, and via email.