Our operations team is closely monitoring COVID-19’s impact on the domestic supply chain, as well as its impact on specific sectors. We expect that market conditions will continue to change week over week as states impose different mandates to help reduce the spread of COVID-19.
To assist our customers and properly strategize in this fluid freight environment, we are monitoring the change in demand in specific geographic markets as well as considering the impact on different industries.
Jonathan Rojas, Transfix’s Director of Carrier Management and Development, has noted significant differences in regional freight markets.
We’re currently observing an unprecedented capacity squeeze in the South, Midwest, and Southeast Coastal regions. The West and Northeast markets have seen the least amount of impact, but we expect things to evolve in the upcoming weeks. We are already seeing an increase in spot requests out of the NE, signaling the potential for markets to flip in the final week of March.
More and more small and medium-sized carriers are electing to remain in the same area while replenishing grocery stores, pharmacies and other essential businesses. As a result, fewer drivers are willing to take on cross country loads.
Fortunately, the Federal Motor Carrier Safety Administration has issued a 50-state waiver to the Hours of Service Rule for commercial vehicle drivers transporting goods related to the COVID-19 outbreak (as reported by Freightwaves). This has provided a modicum of relief, but as you can see from this SONAR chart, tender rejections continue to rise across the country.
Another key component to the shifting market is the fragmentation of demand across different industries. As expected we have seen a spike in demand for commodities like: bottled water, consumer packaged foods, fresh food, sanitation supplies, packaging materials utilized for food and beverage. As consumers start buying these supplies in larger than normal quantities the demand from grocery stores, warehouse stores (Walmart, Costco, Target) and pharmacies has significantly spiked as they rush to replenish their shelves.
On the other hand, demand for apparel, shoes, and other discretionary spending items has dropped. For example, the Wall Street Journal reported yesterday that all Detroit automakers will be closed until further notice. Local, state and federal regulations regarding business closures will determine if and when these sectors heat up again.
The Transfix team 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.