Transfix Take: Weekly Market Update (July 19)

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 Year of the Union and Rate Watches


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 July 19th, and we are bringing you news, insights, and trends for shippers and carriers from our market expert, Justin Maze. Maze, it's summer, it's hot, and everyone is striking. What's going on?

Maze: Hey Jenni, it's great to be back with you this week as well as we dive into the second half of July, as the freight markets in the full truckload sector continue to loosen up in favor of shippers.

Jenni: Yep, no surprise there. As we've been predicting, it's going to continue to be a shipper's market, but the question is when will it change?

Source: FreightWaves

Maze: Exactly, Jenni. We're continuing to see the softness in the full truckload market that we called out would continue. Now, week over week, we have seen about a $0.07 drop in the national average line haul rate, and additionally, we've seen a drop in tender rejections, which was expected. But one thing we continue to call out is the changing seasonality of which markets are more carrier-favorable compared to those that are more shipper-favorable.

Source: FreightWaves

Jenni: And of course, that's what we're here for. But before we get into that, Maze, there's a lot happening in trucking right now with regards to Yellow and YRC, and even UPS. Are there any big callouts that you have?

Maze: You hit it on the head, Jenni. We're going to talk about the UPS and Yellow potential strikes and the impacts they could actually have on the full truckload market.

Jenni: Right. So keep in mind, Yellow is the third-largest LTL provider in the country, and if things don't go in their favor, we could see the demise of Yellow altogether. And furthermore, this could mean volatility in the LTL sector that we were not expecting. So Maze, if that were the case, what do you think will happen?

Maze: Well Jenni, the LTL industry has been going through the pains that we've experienced over the last year and a half in the FTL (full truckload) sector. But Yellow's declines in business metrics heavily outweigh their competitors, and ultimately if they do end up experiencing a strike, it could be the end of a transportation company that has deep roots within the country for many decades.

Jenni: So I think the question on everyone's mind at this point is how will a potential Teamster strike affect the full truckload sector, especially as we are rapidly approaching the peak holiday season?

Maze: I do not think we're going to honestly see too much of an impact just because LTL tonnage and volumes have been relatively low, and other providers will surely be happy to absorb volume and, as I mentioned, we've already started to see Yellow experience larger declines than their competitors.

Jenni: Okay, now let's talk about the perfect storm. So let's say UPS decides to go on strike as well, which is another thing that is pending on the pipeline. Where do you think that will have an impact on the full truckload sector? And will it?

Maze: UPS is a household name. "What can Brown do for you?" And I think it's important to understand the difference between the two companies. UPS is a well-put-together, well-run company, and Yellow has had a lot of struggles in recent years, including a bailout by the US Treasury Department. But going back to UPS, I don't actually think we're going to experience a strike. And if we do, UPS is already taking steps to support any gaps they have. Now what we hear about them training managers and other associates to go and deliver packages, will that fill in the whole gap? Absolutely not, Jenni. There are 340,000 workers part of this union that could potentially strike at UPS if they do not come to terms. Now, at Transfix, we always want the best for workers, especially drivers. But if this does happen and a strike is prolonged, we could certainly see an impact on supply chains. And not only will shippers and carriers feel the impact, but so will everyday consumers.

Jenni: Right. Well, this reminds me of what we experienced in 2021 with port congestion and the backlog of inventory that caused delays around the holiday season. So consumers, if you're listening, it might be time to start purchasing your holiday goods now, just in case.

Maze: That's right, Jenni. If it does happen, there are predictions that the UPS strike could be the costliest strike in US history.

Jenni: Well, let's hope it doesn't get to that point, Maze. Why don't we switch gears just for a bit and talk about the full truckload sector and any big callouts from last week that you want to talk about?

Maze: Overall, markets are continuing on the same trend we experienced since the July 4 holiday, and the national average rate continues to decline. Not as rapidly as some shippers would like, and we're still at a higher rate than we were prior to the 4th of July holiday. But as capacity continues to shift around the country, as seasonal trends are taking place, carriers and shippers need to make sure that they are well aware of how markets will be reacting.

Source: Transfix

Jenni: Well, you know what, it's time for the regional breakdown, Maze. Why don't we get started with the regions that are more favorable to our shipper partners?

Maze: The Southeast and South continue to be favorable regions, with most markets experiencing declines week over week as rates continue to see the largest decline. These regions have clearly flipped after being tighter for the last few months. Now, Jenni, one thing to keep in mind with these two regions is that the capacity that is leaving and heading towards regions like the Northeast or West Coast, is capacity looking to shift into more favorable destinations.

Jenni: So then that would clue me in that on the flip side of that, the West Coast is a more favorable market to carriers. Is that right, Maze? And tell us a little bit about where that stands.

Maze: Rates continue to gain momentum as contract tender rejections climb week over week. Now, I'll go dig a little bit deeper, and I want to talk about Southern California up to the Pacific Northwest. 45 days prior to the 4th of July holiday, we saw rates on freight headed from Southern California up to the Pacific Northwest gain rapid acceleration. And Jenni, over the last two weeks, we've seen rates decline almost as rapidly, but still not to where they were prior. But it's definitely a lane to continue to keep an eye on.

Jenni: And what do you say about the Northeast and the Midwest, Maze?

Maze: Now the Northeast and Midwest are split. We are still seeing pockets of loosening with declining rates, but it really depends on the lane. These regions will continue to teeter between tightening and loosening before becoming more carrier-favored markets as we move into the Fall.

Jenni: Now, let's talk about the Southeast and what you see there.

Maze: Looking to the Southeast, we saw every single market experienced a decline in line haul rates week over week, except for Miami, Florida, but it was an extremely slim increase. Local runs have seen a noticeable decrease in cost, on average around 7%. So carriers out there beware that there is a lack of demand on local runs within the Southeast. When we dig into Atlanta, the largest market by volume in the Southeast, we still see softening, which means that this is going to continue in the Southeast. As Atlanta, the largest market by volume softens,. it's going to continue to spread through nearby markets. Now, rates going to just about any other region are also seeing decreases. So it's not just locals, but locals are definitely the toughest for carriers.

Jenni: All right, and why don't we jump on over to the Southern region?

Maze: The South saw slim increases out of Houston and Oklahoma City, but looking at Dallas and Fort Worth, we saw over 2% rate decreases week over week. Now, it is important to call out that it's the opposite for local runs in the South, as freight staying within the South under 100 miles is the only segment of freight that has seen an average rate increase week over week. But it's really being driven, Jenni, by freight leaving Houston and the El Paso market and staying within Texas.

Jenni: So let's talk about the West Coast because arguably it is one of the more volatile regions for both shippers and carriers. Give us an understanding of what we can expect there and what we should be looking out for in the next couple of weeks.

Maze: Overall, rates are continuing to increase, but there are pockets of loosening, and it's really the seasonality change that I've called out previously. Markets in Arizona and New Mexico continue to see decreasing rates. The same can't be said for California. We're still seeing tightening in most of the major markets in California, which is why the overall average outbound West Coast continues to heat up. Now, freight staying within the West Coast continues to see declines. Carriers want to stay in the West Coast as long as it continues to pay higher rates than they are experiencing in other parts of the country.

Jenni: And given the state of the market, who can blame them? Why don't we shift gears over to the Coastal region? What are we seeing there?

Maze: Most markets in the Coastal region are seeing decreases, and they're pretty modest decreases. The only area of concern for shippers would be the markets touching the Northeast, like Alexandria, Virginia, and Baltimore, Maryland, where they're seeing slim increases. But still overall, the larger markets by volume like Greenville, South Carolina, Charlotte, North Carolina, and Roanoke, Virginia, are seeing declines continue as the markets move more favorable for shippers, which we would expect with seasonal trends.

Jenni: All right, and let's head back home and talk about what's going on in the Northeast, Maze.

Maze: The Northeast is definitely teetering. It depends on what market you're leaving out of and where you are headed. Take the two largest markets, for example, in the Northeast, one being Elizabeth, New Jersey, and one being Harrisburg, Pennsylvania. Harrisburg, Pennsylvania, overall is seeing rates decrease, but in a very slim manner. But if you jump over to New Jersey, we're seeing Elizabeth, New Jersey rates increase by a very slim manner. But as I called out, it really depends on where the freight's going. If it's going back to the West Coast or Midwest, you're more likely to see a decrease as the drivers head to more favorable markets. Now, if it's heading down to the Southeast or South, you are likely to see increases as you are putting drivers in a less desirable outbound market. Now, the same could almost be said for the Midwest. Overall, we're going to continue to see the Midwest slowly decline over the next few weeks as we head into the Fall. But I can't stress it enough. It really depends on where the freight's headed.

Jenni: Well, this was a jam-packed episode with a lot to look out for, especially with regard to these union strikes that we may see in the next week or so. That said, we will bring all of that news and update to you next week in an all-new episode of the Transfix Take podcast. Until then, drive safely.


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