As the end of 2021 draws near, truckload markets remain flat, yet rates continue to rise. According to Truckstop.com, the 7-day rate-per-mile average last week hit $3.56, closing in on the record of $3.62 set this past July.
The West Coast and Midwest keep tightening, heavily favoring carriers, while other regions stay fairly level. West Coast truckload volumes are increasing this year, unlike the decrease we saw after Thanksgiving 2020. West Coast volumes are showing some weakening on longer hauls, though we believe this likely will be short-lived.
This week, we expect markets to start to tighten throughout the entire country. With Christmas and 2022 in sight, truckload tenders should increase, perhaps setting new rate records by the end of the year.
Last week, 96 container ships were waiting for berth in Southern California. Canada is also experiencing similar pain, with 60 ships waiting in Vancouver.
“Imports at the nation’s major retail container ports are expected to end 2021 with both the largest volume and fastest growth on record, despite supply chain disruptions brought on by the COVID-19 pandemic,” according to the monthly Global Port Tracker report from the National Retail Federation and Hackett Associates.
“Imports for 2021 are expected to total 26 million Twenty-Foot Equivalent Units (TEUs), an increase of 18.3% over 2020 and the highest number since NRF began tracking imports in 2002. The projected total would top last year’s previous record of 22 million, which was up 1.9% despite the pandemic. The growth rate would also be the highest on record, topping 16.7% in 2010 as the economy recovered from the Great Recession.”
With imports showing no signs of slowing and inventory-to-sales ratios showing no signs of improving, markets should keep tightening through the final weeks of the year. We expect this to continue well into January, so keeping a pulse on the industry — and the pandemic — to catch future turns will make all the difference for shippers.
Heavy truck orders reached a 26-year low in November — but not due to a lack of demand.
“Preliminary Class 8 orders totaled 9,500 units, according to FTR, down 41% from October levels and down 82% year over year,” Today’s Trucking reports. “It was the lowest total for November since 1995.”
“The low order numbers in November in no way are representative of total demand,” said Don Ake, FTR’s vice-president of commercial vehicles. “The weak volumes are because OEMs are managing their backlogs very carefully. After overbooking almost every month in 2021, the OEMs are being extremely meticulous about scheduling commitments in 2022.
“This strategy will continue until the supply chain situation improves. Once the OEMs are confident they can obtain the necessary production inputs, they will boost production and enter more orders. Backlogs remain at sturdy levels, but OEMs don’t want them much higher until they know their manufacturing capacity. Demand for new trucks is at record levels. There is tremendous pent-up demand generated in 2020 and 2021. Spot rates are at record levels, and contract rates are rising. Prices for used trucks are also at record highs. And when the manufacturing sector of the economy gets past the supply chain crisis, there will be even more freight to haul.”
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.