Transfix Take: Midweek Market Update (July 6)

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

Transfix Take Podcast | Did this 4th of July Bring Fireworks or Sparklers?

Jenni: Well, hello and welcome to another episode of the Transfix Take podcast, where we are performance-driven. It's the week of July 5th, and we are bringing you news, insights, and trends for shippers and carriers from our market expert, Justin Maze. All right, Maze, it's going to be a short one, I know that, but how's it going?

Maze: Hey, Jenni, it's great to be back with you as well this week for a short market update for the short week.

Jenni: And although it is a shorter week than normal, we are recording this on July 3rd. So what are you expecting for the rest of the week, Maze? Fireworks - yes or no?

Maze: I wouldn't say there have been fireworks in the freight industry, more like sparklers. But since last Monday, we've seen the national average line haul rate move up about 5% to $1.70 per mile, line haul only. So carriers have been able to put pressure on the market over the last few days as we left Q2 and rounded out the month of June.

Source: FreightWaves

Jenni: Which is not surprising considering this is the last opportunity carriers get before Labor Day.

Maze: So the next two months will be interesting to see where rates go. Do they continue to maintain that flat point that I called out last week? Or will we see carriers be able to keep rates even more elevated after this week?

Jenni: While considering the recovery from Memorial Day with DOT week was a little bit of an anomaly, I am imagining that might be the same this time.

Maze: That's right, Jenni. I still think we're going to see rates increase slightly over the next two days, but then fall back down the remainder of July to where we saw them right before last week.

Jenni: I have to agree with you, Maze. I think that we're going to see the same thing around this time, but time will tell, right?

Maze: Matter of fact, Jenni, from last Monday to today.

Jenni: And as a reminder, Maze is talking about Monday, July 3rd of this week.

Maze: We saw 124 out of the 135 freight markets experience rate increases, and those eleven saw a very slim decrease compared to the increases in some markets in the Northeast and Midwest, where we have actually been calling out a softening market.

Jenni: Well, while we're here, why don't we get into which markets those are and how they're impacting carriers and shippers?

Maze: Well, Jenni, Elizabeth, New Jersey, and the Chicago market out in Illinois both saw rates increase on average about 4% over the last week.

Jenni: Any notable markets that have softened that we were not expecting, Maze?

Maze: Actually, California - I don't want to say softened because it's still a tight area, but rates did not continue to increase like we have been seeing in the last couple of weeks. Matter of fact, really, the only area that we are continuing to see rates increase at a faster pace than most of the country is in those Southern California and Arizona markets that border Mexico.

 Source: Transfix 

Jenni: And these are going to continue to be the markets that we are taking a very close look at, especially because it has projected a later start to produce season. But Maze, while we're here, you know what it's time for - the regional breakdown. What have you got and where are we starting with?

Maze: Well, Jenni, I don't have too much to call out as we prepare to go into the holiday tomorrow, but I think it's important to call out what I was referring to before, and that's the Northeast and Midwest. These regions we've continued to call out as the softening regions, the areas where shippers have an opportunity. Well, over the past week, we've seen the opposite to where these markets actually got tighter, and rates saw pressure pushing them upward. Now, I do believe that once we get out of the holiday disruption, we'll see both of these regions continue a decline.

Jenni: Interesting developments, Maze. Now, why don't we move on over to what's going down in the West Coast?

Maze: Over the last week, we've actually seen some relative easing in Southern California, though it is not as loose as most of the country. Still, we just haven't seen rates continue to increase. Down in Texas, we continue to see some pressure but relatively easing from the previous few weeks. And out in the Southeast and Coastal regions, we're seeing the same pressure, similar to what we're seeing in the South, really driven by the holiday.

Jenni: So I'm seeing a lot of the same trends that were happening for Memorial Day, which is not surprising given this is somewhat of a similar holiday season for carriers. Overall, where do you think we're going to land?

Maze: Overall, Jenni? I think the remainder of this week, carriers are going to continue to have a little more favorable pool than what they've been experiencing outside of holidays for the last few months. But as we drive into next week, we'll likely see the market soften back up, and rates start declining more favorably for shippers.

Jenni: And before we head out, Maze, let's talk a little bit about where tender rejections currently sit and how that'll impact shippers.

Maze: I think when we actually look at tender rejections, it's telling the same story as rates. Tender rejections have continued to increase at a very slow pace over the last few weeks. Dry van tender rejections are sitting right around 3.75%, which again is still extremely low compared to the pandemic period, where rejections were hovering easily over 20% most of the time. Now, if these tender rejections continue to increase even after the holidays,  I think we're going to still see them higher than where they've been in the last couple of months, but I don't think we're going to see a significant increase to really drive a change in the spot market. But I do think we're going to be in a stronger spot market than we were in prior to the holiday. As a matter of fact, I think by mid-to-end July, we're really going to be able to shape up and bring out that crystal ball to see what we believe the rest of the summer, and even the beginning of Q4 has in store for us. This period from July 4th to Labor Day weekend is usually a slower period, less demand, so it's going to be very telling to see where rates and rejections go and if enough capacity leaves the market to apply pressure even as demand declines.

Source: FreightWaves

Jenni: And while we rarely talk about the LTL sector and what's been going on, something that will be interesting to look at next week is Amazon's Prime Day, which takes place July 11th and 12th, and we'll see how that applies pressure to the overall trucking market, if it'll have any impact on tender rejections, etc. But that said, Maze, have a great rest of your week.

Maze: And I look forward to our conversation next week, and I hope you have a great 4th of July, and everyone else out there, especially drivers continuing to drive through the holiday. Have an amazing time.

Jenni: That's right, we'll see you next week with an all-new episode of The Transfix Take Podcast. Until then, enjoy and drive safely.

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