Transfix Take: Midweek Market Update (May 17)

The midweek market update is a recurring series that keeps shippers and carriers informed with market trends, data, analyses, and insights.

Transfix Take Podcast | DOT Blitz Week + Memorial Day Weekend = Volatility?




Jenni: Well, hello and welcome to an all-new episode of the Transfix Take podcast, where we are performance-driven. It’s the week of May 17, and we are bringing you news, insights, and trends for shippers and carriers from our market expert, Justin Maze. Maze, there’s a lot to cover this week as usual. How’s it going?

Maze: Hey, Jenni. It’s great to be back with you as well this week to talk more about truckload markets, especially now that it is DOT Week.

Outbound Tender Vol Index Van Contract Avg Base RPM

Jenni: That’s right, we’ve been waiting for this week to come. It’s right on the heels of Memorial Day weekend, but it’s a 72-hour blitz that is literally happening right now as we speak. This year, the focus is going to be on cargo securement and antilock braking systems, in addition to other violations that happen in the trucking industry. But Maze, before we get into that, why don’t we talk about what we saw last week and any changes that you might want to call out.

Maze: Now, markets certainly continued to loosen last week. Nationally, tender rejections moved farther and dipped pretty heavily throughout the week, last week coming into DOT Week. We are below 3%, Jenni, and we’re at actual record lows coming in this week, starting at 2.5% of tenders being rejected by carriers. Now, this is heavily driven by the dry van acceptance, but reefer acceptance is nearly just as high.

Jenni: And I’m wondering how that’s going to impact produce season or if that’s a direct impact of produce season starting up.

Maze: Now, Jenni, with tender rejections being so low, we also saw rates continue their decline last week. Throughout the week, we saw a pretty steady decrease day over day, and we hit $1.50 per mile linehaul nationally. Now, we did start seeing an uptick through the weekend and will likely see this continue to increase through this week as we are in DOT Week.

FW Natl TL Index Linehaul

Jenni: Yeah, Maze, I think these ups and downs that we have been experiencing over the last couple of months, although most of it has really been stagnant, is now kind of getting into the lower spectrum of momentum. Is that right?

Maze: That’s right, Jenni. We definitely saw the market shift back into our lower gear as rates and rejections both declined. Now, as we start DOT Week, we have seen some pressure throughout today, although only a couple of hours into the day, and it’s not even the start of the 72-hour period of blitzes. But I will say that we have started to feel some pressure on the brokerage floor.

Jenni: Right. So for those of you who don’t know, we do record these episodes on Mondays, sometimes Tuesdays during the week, so we’re giving you a pre-DOT week update. But something tells me that we’re going to see rates increase in a move to keep drivers on the road. What say you?

Maze: That’s right, Jenni. I do think that rates are likely going to continue to increase throughout the week.

Jenni: But why don’t we give some historicals? What happened last year, Maze?

Maze: Now, last year we saw increases of around 5-6%, depending on the lane, and I think we’re going to see right around the same this week. I think we’re going to continue to see markets get a little bit tighter, definitely California and the Southeast. Now, Jenni, I also think we’re going to see a similar trend going into next week that we saw last year. With DOT Week on the heels of Memorial Day weekend, we’re going to continue to see pressure in the truckload market through the end of next week and in the beginning of the following week as we surpass the Memorial Day weekend.

Jenni: Okay, Maze, my question to you is, do you think that we’re going to see a consistent increase in rates upwards of that 5% to 6% like we saw last year during this DOT Blitz week / Memorial Day weekend?

Maze: I think we’re going to see rates decline slightly throughout the beginning of next week and then rise as we approach the Memorial Day weekend, which is a three-day weekend. And as we all know, usually these extended weekends bring a little volatility to the freight markets.

Jenni: I got to say this is the most excitement that we have had through probably the beginning of the year. But Maze, if I can get you to pull that crystal ball out, where do you think we will end up landing once all of this is over in June?

Maze: If I had my crystal ball, in June, we will likely see the national average fall back to where we were last week, and this will likely remain until we start closing that gap on spot and contract rates, which we are seeing some signs of lately as well, Jenni. We are seeing lower contract rates get reported, which is closing that gap in. But on the flip side, we’re also seeing record high tender acceptance. So it’s definitely something to keep an eye on. But it doesn’t look like freight markets are going to be moving in the carrier’s direction anytime soon outside of this DOT Week – Memorial Day weekend duo.

Jenni: Okay, carriers, well you hear it here first. And shippers, you’re about to learn what are some of those tighter markets that you could take advantage of on the carrier side and shippers what you should be looking out for when it comes to rates that may increase. That said, Maze, where are we getting started in our regional breakdown this week?

Maze: The Northeast to start continues to see downward pressure. Last week we mentioned how we saw greater downward pressure on the localized runs. Well, this past week, we’ve actually seen more downward pressure the longer the haul is. Now, it’s not every market, though. The largest outbound market by volume in the Northeast, Harrisburg, Pennsylvania, essentially remained flat at an average view.

Jenni: Why don’t we jump on over to the Midwest?

Maze: Hasn’t changed, Jenni. We continue to see looseness throughout the Midwest,with every single market outbound from the Midwest seeing a decrease in the average rate week over week. Now, this is definitely something to keep an eye out for as freight going back into the Midwest is not going to be desirable if this continues to be the trend.

Jenni: Okay, well, let’s shift on down to our stubborn Coastal region. What’s going on there, Maze?

Maze: It continues to be a pretty stubborn region, but we did see a pretty sizable decrease in the average rate out of the Coastal region. Now, it’s still not much, but the most notable market is the Charlotte, North Carolina market. This is the largest market by volume, and it saw the largest decrease by market. Coming in right around 2%, the Charlotte market will likely see a turn to higher rates as we drive through the remainder of DOT week.

Avg Change in Outbound Rates Week of 5/8/23

Jenni: And what’s going on in the Southeast region, Maze?

Maze: It is no surprise there’s not much change here. Outbound Florida continues to be hot, but freight going to Florida from anywhere is definitely desirable for shippers. Now, we’re seeing looseness in the Tennessee markets, but in the Georgia markets, even southern Alabama and throughout Florida, we continue to see rates increase leaving.

Jenni: All right, well, let’s haul on over to the West Coast. What are we seeing over there?

Maze: We see a mixed picture here. Now, rates overall week over week have increased out of the West Coast, but it really has to do with where the freight is going. Freight going down to Arizona and Texas is actually seeing a decrease. These are desirable markets for carriers, but freight going to the Midwest or the Northeast is definitely seeing increases. Now, carriers are also looking to go to the Southeast and Coastal as a whole out of the West Coast, but it’s very important to realize that almost the entire state of California continues to see increases week over week. And Arizona has just been a hot market with the most substantial increases throughout the country the last two weeks.

Jenni: All right, now our last stop is over in the South where I know we’re starting to see declines in rates overall. But what are you seeing? Any big call-outs there?

Maze: Now, there are definitely pockets of markets that are seeing increases like New Orleans or Shreveport, but the larger markets outbound, like Dallas/Fort Worth, Houston, are still seeing a slim trend downward, most notably in Houston, though. Houston has seen decreases similar to Charlotte with just over a 2% average decrease in freight leaving the Houston market.

Jenni: Houston, we have a problem. Sorry, I had to do it. Maze, what’s going on over on the border?

Maze: Along the border? It’s a mixed story, but overall, Jenni, it’s just been slim decreases along the Mexico-Texas border.

Jenni: All right, carriers, so for those of you that are listening, right now is the most perfect time to take advantage of any of these rate increases, especially through the rest of the month. So try not to take your truck offline. If you can absolutely avoid it, go for it. But Maze, what do you think the rest of June will look like? I feel like we’re starting to see the bottoming out throughout most of the country.

Maze: Rates will most likely remain stagnant. Like I’ve mentioned before, there are some market-to-market lanes that have found their bottom, and there are some that haven’t. Now there is, like we’ve called out several times, more room to move for freight originating out of the Midwest and Northeast. But Jenni, throughout June, I think we’re going to find the bottoming of most market-to-market lanes, if not early July, but at the end of the day, unless there’s a significant change in demand or supply, I don’t see there being much upside for carriers in Q3. Now on top of that, this past month looking at the net change of authorities, we see that it declined again. It had a negative month-over-month change. Now, I don’t think this is too alarming as there is still a lot of extra capacity in the industry, and a lot of this could just be drivers going from operating under their own authority over to a larger asset fleet. But it’s definitely something that we’re going to keep an eye on, Jenni, as we continue to feel out how the rest of 2023 is going to shape up and when there might be a change and who has the power in negotiating spot rates.

Jenni: Well, only time will tell. Carriers stay safe on the road during Blitz week and every single week, of course. And shippers, if you need anything, our team is always here to help navigate any particular changes, especially during this week and through Memorial Day week. That said, we will see you next week with an all-new episode of the Transfix Take Podcast. Until then, drive safely.

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