Disruptions Pile Up for May; Rates Poised to Rise in June
Last week, freight markets began to calm a bit following two market disruptors during the first two weeks of May — Blitz Week and a fuel shortage. We are now seeing traditional May/June peak markets, particularly in the Southeast and Southwest, gaining steam, and freight volumes are heavily outweighing trucking supply. Nationwide, capacity has been tightening since August and is causing capacity displacement, with tender rejections continuing to hover at around 25%.
“A major call-out is Georgia, one of the industry’s largest markets by volume, which continues to see a capacity crunch,” says Justin Maze, Transfix’s senior manager of carrier account management. “Volumes are at all-time highs in Atlanta; capacity is being drawn into Florida, where rates are very high; continued record imports are pouring into Savannah; and to add more fuel to the fire, Georgia is one of the largest producers of timber and chicken, which are both in short supply in the U.S.”
Rates will continue to rise on freight leaving the Southeast and Southwest. The Midwest and Northeast are the regions to watch for possible softening. “Shippers should be able to take advantage of moving freight in these regions, as the rest of the country will still be battling for capacity,” Maze says. “Shippers with the best freight, appointment times, transit and facilities will win out on capacity, as it continues to be a strong carriers’ market.”
Heading into Memorial Day weekend, we likely will see markets throughout the country be disrupted for the third time this month. “Rates will start to climb later in the week, with increased tender rejections and volume from shippers pushing out more freight in order to capture it in May,” Maze says. “These disruptions are leading to record rates on different lanes throughout the country, and we expect to see this happen again going into the holiday weekend.”
Looking even further ahead, June is a peak freight month. Higher tender volumes, rejections and rates are on their way, as more freight is traditionally moved in the spot market during June.
Keep in mind that topline U.S. import activity is still very high, and this, inevitably, will turn into freight on the road. To add to the volume, ocean freight will also only get stronger throughout the summer. “There is a huge empty-container shortage, with ocean shippers rushing to empty containers, get them back overseas, and use the capacity to import more goods,” Maze says.
Fuel Prices Surge
U.S. diesel prices hit their highest level since November 2018 during the week ending May 17, 2021, according to the Department of Energy. There was a 6.3-cent increase in the national average diesel price, which is now $3.249. The nation’s most expensive fuel is in California at $4.029 per gallon.
“The recent increase was spurred by a nearly 8-cent increase in the Lower Atlantic region, which was dealing with fuel shortages due to the Colonial Pipeline shutdown following a ransomware attack,” Overdrive reports. “While the pipeline shutdown only directly affected the Southeast and East Coast, fuel prices also increased across the rest of the country.” We reported more on this situation in last week’s Transfix Take.
Head’s Up for Brake Safety Week
Commercial Vehicle Safety Alliance (CVSA) announced the dates for the 2021 Brake Safety Week: Aug. 22–28. Inspectors will conduct North American standard inspections of commercial motor vehicles, focusing on vehicles’ brake systems and components. In addition, they will compile data on brake hoses/tubing, the focus area for this year’s inspections.
“Recent research has shown that announcing enforcement campaigns ahead of time improves overall compliance better than surprise enforcement campaigns and for longer periods after the event,” CVSA reports.
According to Overdrive, during 2020’s Brake Safety Week, 12% of the 43,565 commercial motor vehicles inspected were placed out of service for brake-related violations.
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.