Of Gratitude and Capacity
As we come out of the Thanksgiving weekend, Transfix is especially thankful for all the hard-working men and women in logistics and those involved in the supply chain, from drivers to warehouse workers, as they have kept our country moving despite all 2020 has thrown at us.
The freight market has only heated up this past week. Capacity has tightened even more, as normal seasonal trends have begun to take root, just more so. Rates, rejections and tender volumes continued to climb through the Thanksgiving week, hitting new highs.
“Many drivers stayed home through the extended Thanksgiving weekend,” Justin Maze, Transfix’s senior manager of carrier account management, says. “The traditional cap is scarce Thanksgiving week, and rates are generally unpredictable. It is always safer to spread freight out before and after the holiday, but this year has been a little more complicated. With end-of-month pushes falling on the Monday after Thanksgiving, capacity was even tighter, as shippers were forced to move freight Thanksgiving week to meet needs. For shippers that were closed Wednesday through Black Friday, this meant loading up the freight through the weekend and Monday.”
Tender rejections reached yet another all-time high this past week. The Outbound Tender Reject Index (OTRI) is now sitting at a whopping 28.31%.
“If anyone is looking for a breathing period during the first two weeks of December, before another major holiday disruption, I would remind you we are not out of 2020 yet,” Maze says. “Tender volumes, rejections and rates will continue to stay high during the first two weeks of December. Retailers are still racing to keep inventory levels stocked, as they are facing not only the holiday rush, but a second forced rush on specific items due to the rise in COVID-19 cases and new restrictions.”
Imports continue to be congested, and ocean freight shows no signs of slowing, which will keep driving tight capacity across the country, especially on longer hauls. Rail freight is pouring into major freight markets, which translates into more local and regional truckload freight.
“We will not be receiving an early holiday gift of loosened capacity,” Maze predicts. “We suspect that larger markets, such as Allentown, Harrisburg and Ontario, will continue to be tight this week, and it could get even more difficult to move shorter hauls.”
Tighter Capacity, Higher Rates Point to Strong 2021 for Trucking
Experts name unusual and unpredictable freight patterns and a worsening driver shortage among the factors pointing to a very strong market for the trucking industry in 2021, according to John Schulz on Logistics Management.
Prominent industry analysts and top trucking executives “expect retailers to restock depleted inventory and are predicting a long-delayed rebound in manufacturing following the COVID-induced economic shutdown last March.”
“We see an improving environment for trucking,” Avery Vise, vice president of trucking for FTR, a leading transportation research company, said. “The first quarter is not going to be all that strong. But Q2 will be much stronger, and we expect it to continue through the year.” FTR is forecasting 2021 truckload contract rates to rise close to 10%, with spot rates in the high single digits.
Combine that with an intensified demand for drivers — the American Trucking Association is forecasting a shortage of nearly 58,000 for 2021 — and capacity will be tight.
Freight demand will be “very strong” the second half of the year, Vise predicted. “That’s when we expect the industrial sector to get its footing.”
Of course, like 2020, nothing in 2021 is certain. Other factors, including a potential government stimulus package, COVID-19 surges and a coming vaccine that will need a strong supply chain, will all come in to play for the coming year.
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.