Transfix Take: Weekly Market Update (July 19)

Transfix Take Podcast (Week of July 19)

Softer Market Win for Shippers

The truckload market finally started loosening during the past two weeks. Markets throughout the country are seeing a reduction in tender rejections, as well as an easing of spot rates. This is a huge win for shippers nationwide, who have been struggling to find capacity for nearly 12 consecutive months. 

“Even in the major freight markets — including Atlanta, Harrisburg, Chicago and Ontario — we are starting to see lower tender rejections from the tremendous build-up we saw last summer,” says Justin Maze, Transfix’s senior manager of carrier account management. “The biggest callout from the past two weeks is the continued downward trend we are seeing from the Southeast after a hectic few months; tender rejections alone have dropped 6%. 

“Shippers should be happy but cautious, and they should take advantage of the current market now. Tender rejections and spot rates are still at relatively high levels, and any market disruption could shift any market back in carriers’ favor. Carriers should prepare for a shift downward in spot rates for at least the next week or so.”

Contract rates did rise month over month in reaction to the tenders flowing to the spot market, though the volume switching to spot is beginning to decline. The remainder of July will bring loosening capacity through most markets, but traditional tightening will start toward the end of the month. 

“This week, the eastern coastal region will join the Southeast with loosening markets,” Maze says. “The South did not soften as much as we anticipated, and this week will likely be the same. Shippers should keep an eye on the Midwest, where rates will probably start to increase in states such as Iowa, Minnesota and Nebraska.”

Imports Setting More Records

The import story we’ve been telling continues, with the Port of Los Angeles reporting its busiest June ever.

“Key economic indicators all suggest that U.S. consumer spending will remain strong through the remainder of 2021,” said Port of Los Angeles Executive Director Gene Seroka. “Even as Americans return to airline travel, vacations and in-person events, retail sales and e-commerce remain robust. Fall fashion, back-to-school items and Halloween goods are arriving on our docks, and some retailers are shipping year-end holiday products early. All signs point to a robust second half of the year.”

“We’re monitoring ports to see if anything shifts in late summer and fall, as we enter retail peak season,” Maze says. “Ports in Asia are starting to move past their bottlenecks, which translates to more freight to the U.S. In the coming weeks, we will be able to see whether the new federal child tax-credit payments will increase consumer spending, as pandemic stimulus checks did.”

Lower Trailer Orders Don’t Reflect Lower Demand

Orders for new trailers were down year over year in June, but the decline does not signal a lack of demand. 

Some manufacturers are unwilling to book new orders, because they have deep backlogs for new trucks, reports Alan Adler for FreightWaves: “Existing dry and refrigerated van orders awaiting production stretch into the first and second quarters of 2022. Adding more orders would be fruitless, and trailer makers won’t allow it anyway.”

According to Don Ake, vice president of commercial vehicles for FTR Transportation Intelligence: “The market is in a holding pattern until ordering for 2022 shipments begins. Demand for trailers remains robust, as fleets attempt to move an increasing amount of freight during a shortage of Class 8 trucks. Fleet capacity is extremely tight. Trailer production is also constrained by supply chain disruptions and labor shortages.

“Orders are expected to set records once the order boards for 2022 are opened. Trailer demand is expected to be sturdy throughout next year. However, the actual demand for trailers will not be ascertainable until the supply chain problems dissipate. The production situation for early 2022 could be complicated if OEMs cannot build all the orders currently on the books in 2021.”

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.