Transfix Take Podcast: Week of June 28
Tender Rejections Up Ahead of July 4; No Easy Summer Ahead
Last week brought tightening truck capacity throughout the country, as the national tender rejection rate climbed, marking 11 months of shippers facing a rejection rate of 20% or higher. The market tightened slowly through the week, with an increase in rejections of 3% week over week; the Outbound Tender Rejection Index (OTRI) reached 25.11 on Saturday, according to FreightWaves.
“Major callouts to keep an eye on are the jump in rejections out of the Ontario, California, market and the steady rise in national long-haul rejections,” says Justin Maze, Transfix’s senior manager of carrier account management. “For weeks, we have been talking about the record-breaking buildup of freight at the ports, and current conditions could be a sign of those imports starting to move over the road.”
Shippers should prepare for some volatility throughout the first 10 days of July. Along with America’s birthday celebration comes a very volatile freight market that started well before the fireworks. Spot truckload rates for van, flatbed and reefer have held steady at elevated levels during the weeks since Memorial Day, according to DAT Trendlines.
“This coming week, markets throughout the country will tighten,” Maze says. “Capacity will only get more scarce, with fewer trucks than loads that need to be moved for end-of-month and end-of-quarter pushes from shippers. Major freight markets that are already seeing capacity issues will only get worse. Southern California and Georgia markets continue to be the best markets for carriers. The Northeast and Midwest are still areas of opportunity for shippers, but expect to see them get much tighter through the week, as capacity comes offline for the Fourth of July. Rates will get higher through the week, leaving shippers to struggle with their routing-guide compliance.
“Shippers that can hold off moving a load until the second week of July should do so. Carriers, already in a favored market no matter where they dock, can take advantage of the market or take a well-deserved break.”
The first part of July will set the tempo for freight markets for the remainder of the summer, as we drive toward the end of a history-making year. “Large companies, such as UPS, have already started to roll out shipping premiums,” Maze says. “Imports — and port gridlocks — show no signs of easing, pointing to a strong rest of the year. Strap in, and prepare for the summer of freight.”
Fireworks May be the New Toilet Paper
The alarm has been sounded in the week leading up to Fourth of July: There may not be enough fireworks to go around.
“The fireworks industry warns that supply ahead of Independence Day will be down about 30% this year due to supply chain issues,” Ben Popken writes for NBCNews.com “Last year, the United States imported about 255 million pounds of fireworks, mostly from China, according to data from the research firm IHS Markit. Companies increased their orders after record-breaking sales last year neared $2 billion, meaning this year there could be a shortfall of over 76 million pounds of fireworks.”
Shipping containers of fireworks from overseas may well be waiting in the backlogged queues off the U.S. coasts, with slim chances of being delivered in time for the holiday, resulting in limited selection and higher prices for consumers.
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.
