Transfix Take: Midweek Market Update (June 21)

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

Transfix Take Podcast | The Battle Between the West and the South

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 21, and we are bringing you news, insights, and trends for shippers and carriers from our market expert, Justin Maze. Maze, I feel like we were just talking about winter two days ago, but it's now summer. How's it going?

Maze: Hey Jenni, great to be back with you this week as well. And you're 100% right, we're diving right into the summer season this week.

Jenni: That's right. So what do markets look like for you? Have they changed? Have they shifted? What can we expect?

Maze: Well, Jenni, we're still coming off what I would call a pretty hot freight market compared to the last few months. However, it is really regionalized as we continue to experience more seasonality in the industry than we have during the past few years of that roller coaster ride through the pandemic.

Jenni: I think we're all grateful that we're not in that position anymore. But what are the major callouts for you?

Source: FreightWaves

Maze: Well, Jenni, those regions are the South and West coasts. Those markets continue to experience tightening capacity with rising rates. Out on the East Coast, we are seeing a different story as relief was well noticed last week in capacity and rates. And Jenni, when we look at the national tender rejections, we continue to see them climbing over the last two weeks, and we are currently at a level we haven't seen since late March. Now it's only 3.27%, and again, this is extremely low relative to what we've seen in the past few years. But it's still important to monitor and watch as the West Coast and the South are the two regions driving up tender rejections in the past two weeks. And as we expect, these are really the main drivers of where rates are still increasing.

Source: Transfix

Jenni: Yeah, that makes total sense, and I think we're going to continue to see that carry out through the rest of July, maybe even August.

Maze: And Jenni, just to kind of tell the full story of the West Coast, if we look at a longer time frame of tender rejections, we haven't seen tender rejections at this level since almost a year ago in August of 2022. That's right when the rates really started falling off a cliff. Now we're only at 3.4% out on the West Coast, which is still very low relative to what we saw throughout the pandemic. Just to paint a picture for you, as we drove into 2022, we were at 17% rejections on the West Coast. Now, we may be back to levels that we haven't seen since last August, but we're still at an extremely low level and nothing for shippers to worry too much about, but something for carriers to continue to watch as tender rejections usually point to higher rates for them to go and capture.

Jenni: We've been gearing up for this moment for quite some time now. It will be a market flip, and I think that carriers are anticipating it, especially with this news.

Maze: Well Jenni, I do have two callouts before we jump into the regional deep dive. One is I-95. Last week when we spoke, it was just over 24 hours since I-95 was closed. And to be honest Jenni, as we would have suspected, not much impact is being felt in the truckload industry. Actually, if you look a little bit deeper, rates outbound from the Philadelphia market have gone down since last week. There's certainly no rippling effect across supply chains. It really just has localized issues, especially for the Port of Philly. Other than that, whether you're picking up in a large market like Elizabeth, New Jersey, or Harrisburg, Pennsylvania, it's not having much of an impact on truck cost. If anything, shippers just need to keep in mind that there could be delays if that closure is on their route to a pickup or delivery. But to be honest, I do not think we're going to see any significant impact on the truckload market with the I-95 closure.

Source: FreightWaves

Jenni: You know what, Maze, that's really great news. I think unfortunately, with respect to those that we lost during this collapse, the Governor of Pennsylvania did say that Interstate 95 and that stretch that collapsed in Philadelphia is set to reopen within the next two weeks. So it looks like we are going back to normal when it comes to general operations in that stretch of Philly as well.

Maze: Additionally, Jenni, there was a tentative agreement reached by the Pacific Maritime Association and the International Longshore and Warehouse Union. Now, this is great news out West as the ports continue to experience some delayed berths. But at the end of the day, this is a good step forward, and it really hasn't had too much of an impact on the truckload market, thankfully.

Jenni: This is really great news for our maritime buddies, and I'm really excited to see that they've reached an agreement. That said, why don't we go into the regional breakdown and start with some of the more favorable regions for carriers, the South and the West regions.

Maze: As they continue to be tight, leading to pressure on rates, both regions experienced week-over-week increases in aggregate. Now looking deeper, the Dallas, Texas market experienced a jump in tender rejections, reaching over 7%, and rates saw a similar increase as the average outbound Dallas rate increased by over 3%. Now, it's not just Dallas that is a problem market for shippers right now. Other high-volume markets in Texas, such as Houston, Fort Worth, San Antonio, are also experiencing tightened capacity and increasing rates. Now flipping over to the West Coast, the highest volume markets such as Los Angeles and San Francisco, California, also saw rate increases over 3% as most of the markets in California continue to see tighter capacity with rising rates.

Jenni: That's right, Maze, as you've been predicting for the last month or so. So no surprise there.

Maze: As we mentioned last week on the West Coast, we continue to see local runs actually decline in cost, but more regional runs that have longer lengths of haul, such as freight picking up in Southern California going up to the Pacific Northwest or out to Denver or even Phoenix, Lam, Vegas, are seeing rate increases.

Jenni: So carriers keep an eye out on the West Coast. But Maze, what's going on in the South?

Maze: The South is a different story, and we're actually seeing local freight under 150 miles, even up to 250 miles, see steady increases. Now just about everywhere outbound Texas is difficult right now. Freight going into Florida, going up to the Northeast, going up to the Midwest, all are seeing increases. The most desirable location for anyone picking up in Texas is going to be outside of the West Coast. If you're heading to the West Coast, since it is a desirable region itself, you're going to see some softness in the rates.

Jenni: All right, now, switching gears, why don't we talk about some favorable markets to shippers, namely the Northeast?

Maze: As I mentioned previously, we're not seeing any interruption in the freight market due to the closure of I-95. In fact, the largest markets by volume in the Northeast are continuing to see pretty rapid decreases, with Harrisburg, Pennsylvania, dropping just under 2%, and Elizabeth, New Jersey, seeing an over 2% decrease in aggregate week over week.

Jenni: All right, Maze, and now what are we seeing over in the Coastal region?

Maze: We're seeing continued softening in the market as well, mainly on local and short hauls. So anything under 250 miles, we're seeing continued softness, and I expect this to continue through this week. Now, there is one market to keep an eye on, and that's the Charleston market as we are seeing tighter capacity, which is pushing a slight increase in rates week over week.

Jenni: All right, and let's drive on down to the Southeast.

Maze: Now, Florida has certainly flipped. A lot of markets in Florida are seeing decreases over two and a half percent. It's not just Florida, though, Jenni. If you look at the Atlanta, Georgia market, which is the highest volume market in the Southeast and one of the highest volume markets in the country, we are seeing pretty loosening markets as rates continue to decline. This is certainly going to have a domino effect in other markets around the Atlanta market as more capacity moves. Now, there is one call out, though. The western side of the Southeast, which I would consider the Memphis market and Mississippi as a whole, is still seeing slight increases, but this is mainly due to them being more rural markets and the extreme storms we saw going into the weekend and today throughout this early week.

Jenni: Okay, and last but not least, the Midwest. What's happening there, Maze?

Maze: We're seeing a mixed story here, but really if you look at the markets that have volume and drive most of the volume throughout the Midwest, you're seeing softening. From Detroit to Chicago to Bowling Green to St. Louis, markets are seeing decreases in rates. If you look into more rural parts of Minnesota, the Dakotas, Iowa, you are seeing slight increases, but it really depends on where the freight is going. Freight leaving the Midwest destined to the South and West Coast continues to see declines, and that is where shippers have to take advantage. Now, freight leaving the Midwest, going down to Florida and parts of the Northeast is certainly not desirable for carriers to end up in those locations, so they are able to drive higher rates.

Jenni: So now, one thing that I think we need to call out here is we're just a week away from the 4th of July. And I know the 4th of July is a little bit of an anomaly this year as to where it falls, but can you talk to me about what you're expecting to see and any major callouts for shippers and carriers during that time period?

Maze: Now with the 4th of July falling on a Tuesday, it'll be interesting to see what carriers can do on the spot market to put pressure on the overall market. But Jenni, I think we'll see rates slightly increase going into the weekend prior to the 4th of July, and rates increase on that Monday and start to fall back coming into Tuesday, Wednesday, and so on. I don't think carriers have too much room to push on this market and see the results that they were able to get out of Memorial Day weekend because we're going to be back into our falling market by the 4th of July.

Jenni: Okay, well, we'll definitely keep an eye on the West and Southeast Coasts to see what goes on and how that might potentially bring up any big swings. 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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