Transfix Take: Midweek Market Update (June 14)

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

Transfix Take Podcast | NHL & NBA Finals Heat Up with the West Coast Markets 

 

Jenni: Hello and welcome to an all-new episode of the Transfix Take podcast, where we are performance-driven. It's the week of June 14, and we are bringing you news, insights, and trends for shippers and carriers from our market expert, Justin Maze. Maze, as always, it is great to be with you, and I sense that there may be a little drama going on in the coasts.

Maze: It's great to be back as well this week to talk more about the freight markets, Jenni. And you're 100% right. At a national level, there has not been too much change from last Monday to this Monday. But when you peel back the layers, you start seeing a similar trend to what we're seeing in the NBA finals and the NHL Stanley Cup. It's the east coast versus the west coast, and the west coast is dominating.

Jenni: Well, as a native East Coaster, that news always makes me upset when it relates to sports news. But on the trucking front, where do we stand? How long do you see that happening for, and what's the deal there?

Maze: As we continue to roll through this week, I don't think we're going to see too much of a change on that trend. The West Coast is going to continue to be a dominant market for carriers, with rates being a little bit higher and capacity being tighter. But Jenni, like I said at a national view, we stayed pretty stagnant from last week. This week we're starting off at $1.64/mile line haul only, and that's exactly where we were last Monday. And when we look at tender rejections, they really haven't changed too much either. But again, when you peel back the layers, then you start seeing some volatility that follows those seasonal trends that we are usually accustomed to.

Jenni: And I know we were talking this morning about a slower bounce back than normal post-DOT weekend and Memorial Day, but let's hear more about this volatility and what we can expect over the next week or so.

Maze: Well, Jenni, for instance, out on the West Coast, like I said, it's become a hotter market in the past few weeks, and tender rejections back that up. As the West Coast continues to experience increasing tender rejections, along with the Southwest, though we'll continue to see pockets of tightness, we will likely see rates continue to increase throughout the next two weeks. One last call out, Jenni, I had at a national level is for the reefer segment of freight. We've continued to see now for the last seven days reefer rejections climb. They're right around 7% in the West Coast and Southwest, but overall they're continuing to see pressure as capacity tightens, pushing reefer rates upward, and it's something to keep an eye on as we continue our drive through June.

Jenni: Great call out on reefer rejections. It has been a while since we've heard about that. But you know what it's time for - the regional breakdown. Why don't we get started this week where we normally do, out in the Northeast?

Maze: And we are going to continue to see rates decline, most likely even greater than we saw last week. On average, rates decreased about 2% from last Monday to today, and we're going to experience this again this week. Now, one thing to call out is that bridge collapse in Philadelphia on I-95. And for anyone that doesn't know, I-95 is basically an artery for the freight industry. This is certainly going to cause disruption in the Philadelphia market. Now, I'm hoping it doesn't have too much of an impact on the trucking market, but this is a major issue for any drivers heading up through the Northeast using I-95.

Jenni: That's right. So shippers, you can expect some delays when it comes to freight that is moving in and out of I-95 drivers. You can visit PA.gov/i95updates for the latest updates on detours and closures. That said, why don't we head on over to the Coastal region?

Maze: Just a drive down I-95 itself. We've seen continued loosening similar to the Northeast, but most notably if you look at the largest two outbound markets in Coastal - the Charlotte market and Columbia market, we are seeing greater declines, which is a great sign that the entire region is most likely going to see further loosening throughout the week. Now, one thing everyone's got to watch out for on freight leaving the Coastal region is freight headed and destined for Southern Florida. We called it out last week, but this week we're going to talk a little more in-depth on how Florida has started to flip to become a less desirable location for freight to be destined. There was a lot of freight that moves from the Coastal area, especially Charlotte and Greensboro, going down to South Florida. So it's a lane to keep an eye on as it's going to be very difficult to source capacity on without seeing rates increase.

Jenni: All right, now speaking of Florida, why don't we head on down to the southeast and finish out our tour of I-95 this week, Maze?

Maze: Throughout all of the Southeast, every market has seen loosening week over week with declining rates. That's with the exception of Memphis, although it saw an extremely slim increase in market rates. This will likely change this week and we'll see the entire region go week over week with declines. Now, most notably, any freight originating out of the Miami market saw the largest decline of up to 4.5%. This is definitely a signal that Florida has started to flip as freight going there is becoming more expensive and freight leaving Florida is becoming cheaper.

Jenni: And we will continue to keep an eye out on Florida. I know a couple of weeks ago you called that out as a state to watch with regards to produce season kicking up into high gear. That said, why don't we take a quick pit stop in the Midwest?

Maze: The Midwest as a region looks very similar to Coastal Northeast, with general easing and rates decreasing in almost all outbound markets. Now, similar to the Coastal region, freight destined to Southern Florida is definitely going to be tighter and most likely cause you more money this week than it did last week. But freight headed to the West or South is extremely desirable right now as carriers will make their money headed back out of these two regions.

Jenni: And speaking of the West Coast, why don't we head on over there and give a breakdown in terms of what we can expect for the week ahead and the week forward, as it has been pretty tight over the last couple of weeks with regards to rates being favorable for carriers.

Maze: Overall, California, Arizona, and Nevada are hotter markets that are paying carriers more money week over week, and I don't think we're going to see this particularly change this week. Rates are likely going to still see slim increases as capacity starts to crunch, but the increases have certainly started to slow down. I just don't think we're in a place yet to say that rates will start decreasing noticeably.

Jenni: So I guess then that poses the question, are we going to see a big change in rates over the next couple of weeks or so, especially over the summer?

Maze: Well, Jenni, I don't think we're going to see a change in the direction of rates because of the tender rejections and the continued pressure we've seen in the last two to three weeks, specifically on the West Coast as these rejections have continued to rise.

Jenni: Right. And as you've said before, capacity is not an issue, so that makes total sense. Now, I know you're keeping a pulse on not just the freight markets, but some final scores on the NHL and NBA. What's happening there and how does it relate to freight, Maze?

Maze: That's right, Jenni. Not only the Denver Nuggets leading in the NBA finals and the Las Vegas Knights taking it away in the Stanley Cup finals, but both of these markets for the freight industry are also hot, more so Las Vegas than Denver. But overall, the South and West regions continue to be hotter and more in the carrier's favor than the rest of the country. Now let's jump down to the South where we are still seeing a mixed market, and I've been saying this for a couple of weeks now. Some markets are hot one week and then flipped the next week. This week we are back to the border markets where we are seeing markets like El Paso and Laredo continue to tighten up with increasing rates, while some of the larger volume markets like Dallas are actually seeing declines in rates. Now, when you peel back one layer and look at the length of haul, I think this really tells a story. There's a lot of freight that gets moved in and around Texas and city and local hauls - so anything that's about 100 miles or less are actually seeing decreasing rates at a pretty noticeable level. And this is because there's so much desirable freight in Texas right now. But when we look at freight leaving Texas, especially if it's going back to the Midwest, Northeast, or even the Southeast, we're seeing rates increase. And that's something to keep an eye on.

Jenni: I have been waiting for the signal to keep an eye on the Southern border markets, especially with regard to Mexican imports. So we will certainly keep an eye on that in the next couple of weeks. And I know you have numbers to report in regards to net new carrier revocations. Where are we at there?

Maze: Well, Jenni, it continues to be an extremely difficult time to operate as a carrier out there. Just looking at the numbers of trucking revocations in May, they rose sharply again. That means there's a lot of carriers that are still going out of business and owner-operators that are deciding to run under large asset fleets rather than on their own due to how low rates are right now. So that means right now is one of the most important times to understand the freight market and what to expect when you're leaving a specific market that you may not be familiar with or even that you are familiar with. Because like we've mentioned over the last couple of weeks, we're starting to see some states flip, such as Florida this week. And we've talked about Texas as a whole continuing to have an upward and downward swing. So it's very important to stay on top of where the markets are and where you believe they're going to go to make sure that you are putting yourself in the best position to excel and continue to operate at positive margins.

Jenni: Which is exactly what we want for our carriers out there and the reason why we even do this show in the first place. Now, a quick fuel update before we head on out. Carriers have been getting some relief when it comes to diesel prices. They have fallen for the 7th straight week. Now, here's something to keep an eye on. OPEC announced that they are cutting production to about a million barrels a day. We have seen this happen before. When they start to cut production, that means that we'll inevitably start to see those prices go up at the pump. We don't want to see that, but it's something to keep in mind as the summer rolls on through. That said, we will see you next week with an all-new episode of the Transfix Take podcast, and until then, drive safely.

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