Freight and Tender Volumes Continue Unprecedented Rise
With high freight volumes — Transfix has seen an unprecedented 7% week-over-week increase — and record tender volumes continuing, the next few weeks will indicate if we are back on a seasonal trend or still on a pandemic-fueled roller-coaster.
Freightwaves’ Seth Holm reports volumes up 20% year over year, with this week’s outbound tender volumes continuing to spike in many regions around the country. The Outbound Tender Volume Index (OTVI) is now above 12,000 for only the second time in its three-year history (the first was three months ago during the March panic-induced buying spree).
The spike in volume and rapidly declining lead times continue to push rates up. During the past week, we have seen tender lead times decrease and rejection rates continue to increase.
Carriers began rejecting loads at a much higher rate this week than at any time since March. The Outbound Tender Rejection Index (OTRI) jumped more than 400 basis points (bps) during the past week, which is one of the largest one-week jumps in its three-year history. OTRI sits at 12.3%, the highest non-holiday value, excluding March, since the tight summer of 2018. Double-digit tender rejections tend to put upward pressure on rates.
Consumer Spending Driving Freight; Future Uncertain
Consumer spending currently is driving freight, with Americans spending more money on imported goods than usual. This is pushing maritime shipments higher year over year. Retail warehousing markets, such as Memphis and Columbus, have also jumped in volume. On the other end of the spectrum, industrial freight is still down and struggling to make any noticeable improvements.
Justin Maze, Transfix’s senior carrier account manager, looks ahead: “The near future of the freight market is very unpredictable; we are not on a normal seasonal trend. Going into next week, volumes and rates will continue to increase, with Fourth of July marking the traditional summer peak. Carriers will have their pick of what shipments they want to take, as demand will outpace supply. If these trends continue, we could see rejection rates near 2018 levels.
“It’s hard to predict what will happen after that. Volumes could stay steady if the country continues to reopen, especially in the Northeast. But COVID-19 cases are hitting record daily highs in some places, with some states, such as Texas and California, already rolling back reopening. If reopening continues to roll back, the economy could go with that, which will lead to much weaker freight volumes.”
With the unreliable pace of US economic recovery, shippers need a partner that can help adapt capacity in uncertain times. Our carrier network was specifically developed to provide flexibility in changing circumstances across the country.
Trucking Trends That Will Transcend the Pandemic
What will the “new normal” look like? It’s hard to predict, but some pandemic adjustments won’t be going away any time soon. In a roundup of industry experts, Transport Topics discussed several trends in the trucking industry that are likely to last:
- Health and safety: Heightened health and safety practices for commercial truckers are here for the long term. As many drivers have higher-than-average risk factors for severe illness if they contract COVID-19, carriers are taking extra precautions, such as temperature checks and decreased interaction between drivers and others. A medical card or bracelet to indicate vaccination may be on truckers’ horizon — once there is a COVID-19 vaccine.
- Remote work: A portion of carriers’ back-office workforces will continue working from home. This translates to less need for office space, resulting in cost savings for trucking companies that downsize offices.
- E-commerce: Consumers’ increased reliance on e-commerce will also likely continue. “… The expectation is levels for last-mile deliveries will remain higher than pre-crisis,” said Bart De Muynck, research vice president at Gartner. “We’re seeing a lot of investment in last-mile delivery assets, rather than buying tractors and trailers.”
- Driver turnover: Driver turnover is at a record low, with many drivers choosing to stay put, as other economic sectors continue to face layoffs. Low turnover is expected to last at least through the end of 2020, Katie Pyzyk reports.
Currently, transportation analysts anticipate industry growth next year, especially in freight volumes. A supply-and-demand imbalance likely will result in tighter carrier capacity in 2021, De Muynck said, with freight rates expected to increase, as well.
The Transfix team will be monitoring COVID-19’s impact on rates and volume, as well as overall effects on the transportation industry. 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 and social channels, and via email.