Transfix Take Podcast | Ep. 14 – Week of Sept 6
Peak Season Has Arrived, With a Side Order of Hurricanes
Peak season is upon us, accelerated by hurricanes hitting a wide swath of the United States. As we noted last week, a very hostile freight market took hold last Monday, due to a trifecta of market movers. We were already anticipating tighter capacity throughout the country as we ended the month, which was exacerbated by Labor Day weekend and a major hurricane.
Markets moved in all regions last week. The start of September saw the South and Gulf regions and their neighboring markets struggle with capacity due to the arrival of Hurricane Ida. Hurricanes of this magnitude have long-lasting effects on the supply chain, but immediate effects included rapidly rising rates in the areas directly hit by the hurricane — Louisiana, Mississippi and Alabama — and neighboring markets in states such as Tennessee and Georgia. Capacity shifted to avoid the weather, with shipping patterns changing and assisting in relief loads. In addition to the disruption brought on by Ida, markets tightened quickly on the West Coast, especially in the Pacific Northwest, which is heading into its produce season.
Reefer rates will continue to increase due to a lack of capacity. The refrigerated segment posted its strongest weekly spot volume ever for the week ending Aug. 27, according to data from Truckstop.com and FTR Transportation Intelligence. “Historical patterns would suggest that the current week heading into Labor Day will represent a peak for refrigerated until just before Thanksgiving, but ongoing disruptions in the supply chain and consumer spending could keep [it] at near-record levels,” Commercial Carrier Journal reported.
This week, we will see what seems like a relief in capacity, but do not be fooled. As we move through the week, rates will increase. While the Midwest and Northeast have been the tightest markets, we will see the West Coast competing with them, as more longer-haul volume hits the road and puts pressure on spot rates.
Port Congestion Disrupting Supply Chains Nationwide
Once again, the buzz of the industry last week was the congestion at ports on the West Coast. The number of ships at anchor seems to hit new records every day, and the amount of goods coming into the U.S. will not slow down any time soon. Maritime bookings increased 40% just in the past two weeks, which means a lot more freight will be making the voyage in the near future. This continues to affect the ever-changing truckload market in the U.S., with shippers pushing more volume into different ports on both coastlines. Combine more volume with multiple points of congestion, and it makes for a stressful Q4 for everyone in the industry.
Shippers need to ensure these goods are on the shelves in time for the holidays, which is forcing a lot of this freight to move over the road instead of on already-congested rail lines. Shippers are using ports around the country to avoid wait times on the West Coast, creating additional disruption to their supply chains, as they create new lanes to move their freight. This leads to mini bids or more volume they need to push into the spot market.
Shippers are still battling to supply demand, and they are now being forced to pull forward more inventory sooner due to fears of not being able to get it in a timely manner. Sales-to-inventory ratios are still at very low levels, as we gear up for the holiday shopping season, and every retailer wants to make sure they do not miss a sale. This is leading them to spend more money to pull in inventory. Consumers will see this hit home more through the next few months: Cars are in short supply, and Ford even had to shut down some of its production sites.
The movement of freight is changing in every mode, as shippers do their best to keep up with record demand while fighting congestion at multiple points throughout the supply chain. Shippers who think forward, use data and think outside the proverbial box on solutions, while partnering with companies such as Transfix, will come out of this ongoing freight rally in a better position and well ahead of competitors. The one huge win through this pandemic has been speeding up the digital transformation of the transportation industry.
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.