Transfix Take: Midweek Market Update (Oct. 20)

Transfix Take Podcast | Ep. 23 (Week of Oct. 18)

2021 Trends Following 2020’s Lead

Truckload volumes have begun following a similar trend to what we saw in 2020. Last week saw volumes declining in most regions, which also slowed down rising spot rates. The decrease has been most noticeable in the Northeast and Midwest. The West Coast, on the other hand, is seeing increasing volumes. This puts more pressure on spot rates, as longer lengths of volume continue to increase. 

In most regions, shippers were able to enjoy a brief relief, but we anticipate this will be short-lived. Truckload volumes likely will turn upward toward the end of October, just as we saw in 2020. A flat trend this week should catch some steam by midweek and heat up through the rest of the month. We see pressure on capacity and rates out of the West Coast, and we expect that to start playing out throughout the country. This includes the Southeast, with some East Coast port markets already heating up.

As we move closer to the holidays, the Pacific Northwest likely will continue its hot streak with low capacity for shippers. If rates continue to rise, we expect carriers may move toward the West Coast gold rush, shifting capacity in nearby regions. The big question is whether we’ll head out of the Q4 valley and start up a hill of higher rates. 

White House Tries to Ease Congestion; West Coast Ports to Expand Hours

From boardrooms to the media to the White House, the supply chain is in focus for everyone. This past week, the Biden administration announced the Port of Los Angeles will join the Port of Long Beach in operating 24/7.

“The commitments come as LA-LB deal with heavy volumes of imports that have led to severe delays for ships reaching berth and shippers being able to retrieve their goods,” Michael Angell wrote for JOC.com. “Los Angeles and Long Beach saw container volumes grow 30% and 20%, respectively, this year through August compared with the year-earlier period, according to the White House.

“Major shippers have also agreed to use the night gates and extend their own operating hours to handle the imports. All in, the shippers will move an additional 3,500 containers per week off the ports during the nighttime gate hours, the White House said.”

While this may not fix the congestion of the supply chain entirely, it is a step in the right direction. For a long-term solution, larger issues — including chassis, labor shortages at multiple points, rail congestion, warehousing/transloading hours of operations, and lack of warehouse space — will need to be addressed. 

While Long Beach began extended gate hours in September, “uptake of the extended hours has been limited, due to most shippers not having evening hours at warehouses for receiving goods,” Angell wrote.

Moving freight onto land more quickly could even cause more issues if other parts of the supply chain aren’t also supported. A number of large trucking associations, including OODIA (Owner-Operator Independent Driver Association) and HTA (Harbor Trucking Association), believe the White House plan to extend port hours will make no noticeable difference. The expected volume gain is a drop in the bucket compared with the volume that moves through the port. 

Diesel Prices Continue to Rise, Jump 18 Cents in Two Weeks

Diesel fuel prices nationwide jumped 18 cents during the first two weeks in October. According to the Department of Energy, the week ending Oct. 4 showed a fuel increase of 7.1 cents, and the week ending Oct. 11 showed a 10.9-cent increase.

The average price for a gallon of on-highway diesel in the U.S. is now $3.586 — the highest point since December 2014, Overdrive reports. California claims the county’s most expensive diesel, at $4.425 per gallon, and the Gulf Coast region has the cheapest fuel at $3.335 per gallon, according to ProMiles’ Fuel Surcharge Index.

The movement of freight is changing in every mode, as shippers do their best to keep up with record demand while fighting congestion at multiple points throughout the supply chain. Shippers who think forward, use data and think outside the proverbial box on solutions, while partnering with companies such as Transfix, will come out of this ongoing freight rally in a better position and well ahead of competitors. The one huge win through this pandemic has been speeding up the digital transformation of the transportation industry.

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.

This communication may contain certain forward-looking statements that are not statements of historical facts. All such statements are based on current expectations as well as estimates and assumptions that, although believed to be reasonable, are inherently uncertain. These statements involve numerous risks and uncertainties, and actual results may differ materially from those expressed in any forward-looking statements. We undertake no obligation to update or revise any of the forward-looking statements contained herein, whether as a result of new information, future events, or otherwise.