.svg "TransfixLogo-rev-tagline (1)")
As a part of our on-going COVID-19 coverage, we’ll be providing breaking news, resources, and insight into the pandemic’s impact on the industry.
James Williams, Transfix’s Director of Operations, penned an op-ed for the Wall Street Journal on Friday entitled “From Iraq to New York: Thank Those Who Keep on Truckin’.” As a combat veteran, Williams drew direct parallels between the importance of a reliable supply chain during wartime and the logistical role truck drivers are playing during the current pandemic. Williams’ insight in the piece went beyond the obvious need for moving essential goods from point A to point B. It went a step further, delving into the psyche of both the American soldiers and Iraqi public in 2008. Williams wrote, “…less appreciated is the confidence (a reliable supply chain) instilled in soldiers and the community. Perception can quickly become reality. Fear that shipments wouldn’t arrive could have quickly eroded morale or spooked a fragile economy.”
In the past month, the domestic supply chain has earned the public’s trust and instilled confidence in the American people. Despite wait times and occasional runs on particular items, short-term panic never materialized into widespread hysteria. And as consumers realized that essential items like toilet paper, bottled water, and sanitation products would remain available (if not abundant), the historic demand for such items has nearly returned to pre-COVID-19 outbreak numbers. Without this historic influx in demand for essential items to buoy a freight market impacted directly by the loss of small business production nationwide, volume has nowhere to go but down in the coming weeks.
According to FreightWaves’ SONAR data, the outbound tender volume index (OTVI) is returning to pre-outbreak levels just as quickly as it rose. Seth Holm, a senior research analyst at Freighwaves, wrote over the weekend that, “if OTVI continues its descent at this pace, we would expect volumes to fall another 6% before our next publication. Volumes are still elevated above historical comparisons, but with consumer spending down 30%, we expect volumes to tumble for the month of April.”
Justin Maze, a Senior Carrier Account Manager at Transfix, has also noted a shift in the spot market for non-essential goods.
Since the week of March 16th, spot freight has dropped across the country. This is largely due to non-essential shippers slowing or halting production, which has led to a reduction in the volume of freight they need to move on the spot market. Additionally, essential shippers have already stockpiled freight in response to the pandemic. Within days of the US outbreak, they started back-filling warehouses as a precaution. Interestingly, freight volumes have uniformly returned to pre-outbreak levels across all regions.
Volatility and lower than usual demand are expected, but the size and scope of this freight lull remains unclear. The major variable in this freight equation is the CARES Act. The $2 trillion stimulus package is hoping to revitalize struggling small businesses by providing advantageous loans (EIDL) and forgiving loans entirely (PPP) that are 100% used for personnel (rehiring & maintaining workforces), rent, mortgage interest or utilities. If both programs have the desired effect and impact consumer confidence and spending, volume volatility could stabilize across the country. What we know for certain is that carriers will be able to handle a sudden influx of demand should manufacturing and production come back online all at once, just as they did with the run on essentials last month.
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.
