Southern California Leads the Way on Record Freight Volumes
Just when we thought they couldn’t go any higher, freight volumes on the West Coast continued their rise.
“As you look at import customs data at the Los Angeles port, you’ll instantly see why volumes continue to drive upward,” says Justin Maze, Transfix’s senior carrier account manager. “Import volumes are 34% higher YoY, and we have not even entered the prime holiday season. On top of this, ocean bookings are still well above seasonal averages, so the West Coast carrier gold rush is here to stay.”
Increased consumer spending is at the driver’s wheel, forcing the expediting of goods to the West Coast, then repositioning the freight throughout the country. Southern California’s two largest ports reported strong results in July, rebounding after volumes in the spring were affected by COVID-19 and United States–China trade tensions, The Maritime Executive reports. July was the seventh best month in the history of the Port of Los Angeles, and the Port of Long Beach reported its best July ever.
Port of Los Angeles Executive Director Gene Seroka says, “Preliminary data for August indicates solid volumes, as retailers continue restocking inventories and preparing for the year-end holiday season.”
Tender Volumes, Rejections Rising Into Labor Day
The Outbound Tender Volume Index (OTVI) climbed 7.4% this week to a new all-time high of 15,329. Freight volumes measured by OTVI are now 45% above 2019 and 55% above 2018.
After a slight lull early last week, tender rejections began to climb and continued doing so this week. The Outbound Tender Reject Index (OTRI) rose again to just less than 24%, meaning nearly one in every four tendered loads is being rejected at contracted prices, FreightWaves reports.
“Surprisingly, carriers are not giving a discount to the hot markets, as they normally would,” Maze says. “This is because carriers are getting high rates in any market, as rejections and volumes climb just about everywhere. As we talk to our partners, we have gotten the sense that next week will be extremely busy through the Labor Day holiday. Volumes and rejections will continue to climb, as shippers prepare to push even more freight. We will most likely see volumes surge through the whole week, as if every day were the last day of the month.
“Forecasting tools of the past have shown little or outdated relevance to what carriers are currently seeking. One of the most difficult things right now is to be able to determine a lane’s market rate. Transfix continues to monitor what’s happening on multiple ends of the business; our deep understanding of carrier costs in the current spot market rush is essential to our clients.”
Retail Posts Healthy July
Continuing its recovery from the depths of the spring pandemic, U.S. retail sales showed gains in July, according to data from the U.S. Department of Commerce and the National Retail Federation (NRF).
As reported in Logistics Management, the Department of Commerce said July retail sales were up 1.2%, compared with June, and up 2.7% annually. Total retail sales, from May through July, were down 0.2% YoY. Retail trade sales rose 0.8% annually, and non-store retailers, which includes e-commerce, continued their pandemic surge, increasing 24.7% annually, with food and beverage sales up 11.1%. Electronics and appliance stores posted the biggest July gains, owing to the purchase of home computers.
Of the current state of retail, NRF Chief Economist Jack Kleinhenz said in a statement: “Retail sales are starting the third quarter on a solid footing, considering the nosedive we saw this spring, but we have to remember that there’s uncertainty about economic policy, and that the resurgence of the virus is putting pressure on the fledgling recovery. While households are spending, they are anxious about their health and economic well-being, so they are being pragmatic. The amount of uncertainty about forecasting is huge, as we look toward the second half of the year, and what happens with the economy comes down to what the coronavirus allows us to do.”
With the uncertainty and volatility surrounding the US 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.