Transfix Take: Midweek Market Update (Nov. 10)

Transfix Take Podcast | Ep. 26 – Week of Nov. 10

Volume and Rates Are Up, Rejections Are Down

Volume is still following a similar trend to what we saw last year. After a few weeks of feeling some relief on truckload volume and rates, both headed upward this past week. If trends continue to reflect what happened in 2020, we will see volumes rise slightly this week and intensify as we get closer to Thanksgiving. Then, following the anticipated holiday squeeze on capacity, volume will drop, only to start rising and intensifying again toward the year’s final weeks. This is when capacity is usually the tightest and shippers are most at risk, with drivers taking time off for the holidays. Shippers also need to keep an eye on winter weather, as any winter storms will exacerbate an already volatile and disrupted supply chain. 

Unlike last year, national rejection rates have finally dipped below 20%. The last time they were this low was in February just before the big storms. This time last year, one out of four loads was being rejected. Could this be an indicator that rejection rates will fall into the low teens in Q1 of 2022? It will be interesting to watch what happens.

While shippers in much of the country enjoyed easing capacity through October, the same cannot be said for those on the West Coast. California and the Pacific Northwest have tightened, leading to higher rates and capacity shortages. The Pacific Northwest, where produce season is in full effect, has seen average market rates jump from 15%–30%. California markets are seeing more long-haul freight heading east, which attracts more capacity. This is also similar to the trend we saw last year. 

Container Fines Seem to be Working

As we reported last week, the Port of Los Angeles began imposing fines on ocean carriers for cargo containers left at the port for nine days or more. According to CNBC, the port’s executive director said the new policy is working.

“We’ve tried diplomacy. We’ve tried collaboration, operations meetings all around, and nothing has moved the needle just yet,” Gene Seroka said in an interview. “This is a last resort, and one I didn’t want to have to take, but we’re starting to see movement.”

“It’s getting this product off the dock that is just so imperative,” he said. “We’ve tried almost every angle possible, and now this one has gotten some folks thinking a little bit more than they have in recent weeks and months.”

What Effect Will Infrastructure Bill, Vaccine Mandate Have in 2022?

As we near the end of our drive through this year, we’re looking ahead to 2022. Congress finally approved a new infrastructure bill, and the vaccine mandates drafted by OSHA currently do not have an explicit exemption for the trucking industry. There have been positive signs of more drivers coming into the market, but both the infrastructure bill and the vaccine mandate have many in the trucking industry worried.

We’re not sure what effects the infrastructure bill will have, but we expect it will bring even more freight demand and more job competition. The bill likely will be a boon for the construction industry, which attracts employees from the same pool as the freight industry.

According to Newsweek, the American Trucking Associations (ATA) claims the industry could lose up to 37% of drivers because of the vaccine mandate. As recently as the past Friday, ATA President and CEO Chris Spear claimed that drivers are exempt from the vaccine mandate: “… Drivers spend the vast majority of their workday alone in the cab and outside. The rule published yesterday exempts employees who exclusively work outdoors or remotely and have minimal contact with others indoors, and all indications thus far from the Department of Labor suggest this exemption does apply to the commercial truck driver population.” It remains to be seen whether this exemption will be applied to truck drivers.

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.