Protests by several hundred owner-operators at the Port of Oakland ended last week as drivers returned to the road after having caused what have been described as various operational inefficiencies and problems at the Port. In the meantime, the City of Oakland and the Port Commissioners last week filed suit requesting a temporary restraining order, and thereafter a permanent injunction, in hopes of discouraging future protests. As of this posting, no decision has been issued by the court.
It seems apparent that AB5 is here to stay in California. While many pundits have suggested work-arounds to avoid running afoul of the new regulation, including owner-operators becoming certificated motor carriers, only time will tell as to when the state will begin enforcement actions and how these compliance strategies will play out.
Rail congestion, labor union negotiations, and AB5 protests have caused anxiety and unrest in the industry, but the actual disruption to the truckload market has been minimal. It was only a few months ago that we were counting the ships sitting off the coast of Southern California, a record-setting congestion that plagued shippers.
But the West Coast is not alone in mounting industry anxiety. The ports on the East Coast and in the Gulf are seeing increased ship congestion week after week, nearing the levels we saw in October 2021 when pictures of cargo ship traffic made the mainstream news. While these vessels are spread through different ports, this congestion should still be sounding alarms.
As shippers continue to push more imports to the East Coast and Gulf ports, volume records are being set, and along with records come backlogs and congestion. As of July 28th, after seven weeks of increases, resulting in a total increase of 66% over the period, U.S. ports are back above the 150 mark of queued ships waiting to deliver imports. Let’s welcome Savannah, Houston, and NY/NJ to the party as they get accustomed to the same struggle the West Coast still navigates.
The ports of LA and Long Beach are seeing around 28 vessels at bay – down significantly from January’s 109. It seems as if we haven’t eliminated the problem, just spread it around and made it more difficult to see all in one place.
As we shift gears into late summer, domestic freight markets remain flat with turns in the Southeast and Northeast regions. To understand freight markets, we are constantly monitoring these three core indicators: tender volume, rejections, and rates. In the past four weeks, we have seen little to no change when looking at these metrics on a national level. Freight volumes have remained flat, while tender rejections inch closer to 5%. Rejections have been sitting between 6% and 8% for over a month. With no significant change in volume or tender rejections, rates have stayed near flat, outside of a couple capacity-tightening exceptions, such as Independence Day weekend.
Shippers continue to experience ever-softening markets throughout the Southeast. According to FreightWaves’ SONAR data, tender rejections continue to move downward in most markets, but the Southeast sticks out as rejections declined by 43% since June 15th. Rates are declining as well, following tender rejections on a downward path. Volume leaving Southeast markets is declining, but not as rapidly as rejections and rates. For example, volume out of Atlanta has dropped only 7%. Over the past week, only low-volume markets have seen a noticeable outbound volume incline. Not even the port volumes passing through Savannah have been enough to stop the loosening throughout the Southeast.
The Northeast is a different story, as truckload markets are tightening. Shippers are dealing with import volumes continuing to set records at the New York and New Jersey ports. As a result, truckload rates are under pressure, and shippers and carriers should keep an eye on this one region for rate increases. While the increases were slim (most under 2%), this region is an anomaly, as most other markets continue on a decline.
The cost of fuel is moving in favor of everyone – not just shippers and carriers, but for consumers, too. Based on SONAR data, fuel prices have continued to drop over the past few weeks and the national average for diesel is at levels we haven’t seen since the beginning of May.
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.
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