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.
Freight Volumes Rebounding As Nation Reopens
National freight volumes have been steadily climbing since mid-April, increasing by roughly 15% in the last 30 days. For added perspective, Freightwaves Outbound Tender Volume Index (OTVI) was down 16% year-over-year on April 15th. On Friday, the OTVI was up 5% in comparison to mid-May of 2019.
Numerous industry analysts, including Freightwaves’ Senior Research Analyst Seth Holm, anticipated an uptick in load volumes in the wake of states reopening, but the pace of the recovery is noteworthy. “The Freight Intel team expected volumes to bounce off the bottom once parts of the economy reopened, but the rise over the past two weeks is surprising to us,” noted Holm as a part of his weekly industry analysis.
The rapid pace Holm is referring to is best captured in the week-over-week data. National volumes are up 6.5% WoW. This volume shift in the market will soon be reflected in the tender rejection figures. Rejection indices generally lag four to five days behind volume indices on a national level. This load volume influx, paired with drivers idling their trucks and removing capacity from the market, has the potential to significantly impact what has been categorized as an extremely loose market in recent weeks. As a digital freight broker, we remain well-positioned to provide the timely capacity shippers will need when freight volumes impact the availability of trucks in the second half of 2020. Our carrier network was specifically developed to provide flexibility in tight circumstances and to regions impacted by swings in freight volume.
Huge Week For Manufacturing
The rebound in freight volumes last week has only magnified the importance of this week’s auto reopenings from a market momentum perspective. If the market hopes to escape the whipsaw nature of the last two months it will require a major contribution from the manufacturing sector. According to the New York Times, auto part suppliers and major carmakers will gradually crank up production this week. Not only will their supply needs provide a shot in the arm to carriers and impact RPM figures, but their level of success may provide other manufacturing sectors with a blueprint of how to safely return to pre-COVID-19 production levels.
If this week proves to be a success for the auto industry, the next question will be the long term viability of the sector. Julie Fream, CEO and president of Original Equipment Supplier Association, believes the industry requires an injection of federal funds in the neighborhood of $25 billion dollars to stave off widespread issues, including bankruptcies. Tacking this request onto the next stimulus package is an idea that is already picking up steam in the House, particularly among Rust Belt congressional representatives. “This next stimulus package needs to address not only the auto assembly folks but the auto suppliers, the whole supply chain,” U.S. Rep Fred Upton (R-MI) told CNBC’s “Squawk Box” last week.
The Transfix team will be monitoring the impact of manufacturers reopening and the subsequent impact it will have on regional and national rates. As a company, we remain 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.