Transfix Take: Weekly Market Update (July 26)

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

Transfix Take Podcast | Which Markets Are Carrier-Favored vs Shipper-Favored?


Note: Since the recording of this week’s Transfix Take, UPS and the Teamsters have announced they have reached a tentative deal on a new contract, including wage increases for full- and part-time employees. Also, Yellow’s senior VP of sales announced to employees on Wednesday that Yellow may file for bankruptcy on Monday, July 31st


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 26, and we are bringing you news, insights, and trends for shippers and carriers from our market expert, Justin Maze.

Maze: As always, it's great to be back with you, Jenni, as we shift gears into the last week of July after a somewhat news-breaking weekend in the transportation industry.

Jenni: Now, that is definitely putting it mildly, Maze. But a lot has happened since we last spoke, especially regarding Yellow and UPS. I want you to talk all about it. What's going on?

Maze: That's right, Jenni. It came down to the last minute, but Yellow was able to avoid the  strike we spoke about last week. They were given an extension of 30 days by the Central States Pension Fund to make the $50 million pension and benefits payment. They expect to make it in the next two weeks, but it's something to continue to keep an eye on. Now, the workers did not strike, but it doesn't mean this didn't have an impact on the already-struggling business Yellow has. So it's going to be something that we continue to keep an eye on in the coming months.

Jenni: And we're all really happy about this development. But there is another strike that we are keeping a close eye on.

Maze: That's right, Jenni. Now it's all eyes on the potential UPS strike, where they have 340,000 union members ready to strike if they are unable to come to an agreement, and conversations have been breaking down in the past several weeks. Just days away, Monday, July 31 is when their contract is up. So this is something that everyone, whether you're in the industry or not, needs to keep an eye on because UPS has such a significant impact on the supply chain that we all use every single day. So this is something, Jenni, that you can surely bet I'm going to be watching very closely. But not only I, this is probably going to be making front page news everywhere, as the impact could be pretty devastating. But I don't change my tune. I don't think this is actually going to happen. And I do believe that there's going to be an agreement made by the deadline, if not an extension.

Jenni: I wouldn't be surprised if we saw an extension, at least for the foreseeable future because this would be a most expensive strike. It would cost anywhere between $7-8 billion. That's a lot. But that said, let's talk about developments that have happened in the full truckload sector of the market.

Maze: We've continued to see a downward market after the Fourth of July weekend. Well, Jenni, tender rejections did drop through the first two weeks of July, but surprisingly, we are seeing tender rejections continue a slow climb upward, back over 3% this week.

OTRI Week of July 26, 2023
Source: FreightWaves

Jenni: Which is specifically interesting as we inch closer to Labor Day and back-to-school season.

Maze: Now, when I look at the overall volume in the market, it kind of paints the picture of why - traditionally in the back half of July, we see volumes drop off. But this year we are seeing volumes maintain and stay stable.

Jenni: Which could also be an indicator of why we're starting to see rates stabilize. But it does depend on which region we're talking about specifically because out on the West Coast, for example, we're starting to see seasonality shift - West Coast and Southwest regions. But keep going, Maze.

FW Natl TL Index (Linehaul) Week of July 26, 2023

Source: FreightWaves

Maze: Week over week, we did see the national average rate per mile linehaul have a slim decrease. But again, it really depends on where your freight is originating and destined to.

Jenni: Well, that feels like the perfect cue-up for the regional breakdown, Maze. Where are we starting this week?

Weekly Change in OB Rates Week of July 26, 2023

Source: Transfix

Maze: Well, Jenni, this week we are going to start in carrier-friendly regions. And what I mean by carrier-friendly are regions that are experiencing rising costs for shippers. And that puts us on the West Coast, where we've called out for the last several weeks increasing cost for shippers to ship stuff out of the West Coast. And it has continued, but it has slowed down. And it’s important to call out that we have started to see a slowing in the rising cost out of the West Coast. Now, when you look at one of the largest markets by volume, outbound Ontario, California, we're still seeing volume increases, which is important to take note of. Overall, the West Coast has seen a slim increase in the average outbound rate. But one thing I will call out is that Arizona, New Mexico, and Colorado, states that have seen tight markets in the past few months, are seeing the reverse, where rates are continuing to decline. But when you look up into the Pacific Northwest and California as a whole, rates are still trending more in a carrier's favor with increases week-over-week rates.

Jenni: So I know there are not too many other regions that are specifically carrier-favored regions, but let's draw a little bit of attention to the Northeast. What's happening there?

Maze: To my surprise, the Northeast actually saw a very slim week-over-week rate increase. But again, it really depends on what market you are originating out of. For instance, the largest market in the Northeast by outbound volume, Harrisburg, Pennsylvania, still saw a rate decrease week-over-week, but more lower-volume markets such as Bristol, New Hampshire, or Buffalo, New York saw increases week-over-week. But overall, the Northeast experienced a slim increase week-over-week, which I do not anticipate to continue throughout this week or the coming weeks.

Jenni: All right, well, why don't we switch gears and head on over to the Midwest?

Maze: We are seeing most markets shift in the favor of shippers, but it's still a slim rate decrease week-over-week. The major markets are certainly seeing larger decreases week-over-week than the more rural markets like Bismarck, North Dakota, or Rapid City, South Dakota. But the larger markets such as Chicago, Illinois, or St. Louis, Missouri, are still seeing declines week-over-week, but the Midwest continues to be a region to keep an eye on. I do believe that we are going to continue to see a downward trend in the average rate leaving the Midwest for the next few weeks. But as we turn gears into the winter and I know, Jenni, I am speaking months ahead of time, but as we turn gears into the winter, carriers will start getting some relief in the Midwest and Northeast, but we're still not quite there yet, as we are just about to turn into August.

Jenni: Yeah, Maze, please let us enjoy these last few months of warmth before we head into freezing cold temperatures. Why don't we head on over to the Sunshine State, Florida, and the rest of the Southeast?

Maze: There is no change in the story here. The entire Southeast region, every market, experienced rate decreases week-over-week. Take the largest market by volume in the Southeast, Atlanta, Georgia; we saw a nearly 2% decrease in rates week-over-week. When you go farther down south to Jacksonville or Miami, we're seeing larger decreases. The Southeast has certainly flipped, and we called this out several times, but this region will continue to move farther in favor of shippers. But carriers can demand a higher rate going into the Southeast as it is a less favorable place to be ending up on a trip.

Jenni: All right, well, why don't we take a journey over to the Coastal region, Maze? What's going on there?

Maze: We're not seeing much of a different story than we are in the Southeast. Most markets, especially the higher volume markets, are still experiencing decreasing rates week-over-week. There are some pockets of tightness, such as Baltimore, Maryland, and Alexandria, Virginia, but again, those are the markets bordering the Northeast. For the rest of the Coastal region, we are still seeing pretty noticeable changes downward, especially out of markets like Charlotte, North Carolina, and Columbia, South Carolina. Now, again, I don't think this trend is going to change much at all in the coming weeks as we continue to move through the slower months of summer.

Jenni: So, taking a look at the South region, what are we seeing there? Any big changes to note?

Maze: Again, not much of a different story here, Jenni, and I don't mean to sound like a broken record, but we're continuing to see rates decline. Now, like I called out in the beginning, we're seeing rates decline across the country coming off of the surge in rates from the Fourth of July weekend. So this is not a surprise to anyone. And at the same time, we are shifting away from the South region's favorable time of the year for carriers, which is the earlier parts of the summer. Again, I'm not trying to call out winter too early because I don't want to leave this good weather behind, Jenni, but the closer we get to the winter months, the more favorable the South region becomes for shippers.

Jenni: You know what, Maze, I think probably selfishly, we're both waiting for the winter to come just so that we can determine what are the big market flips that we have been either right on or wrong on as it relates to the next six months. So it'll be very interesting, but you really just can't wait for winter to come because you're out in Atlanta and I'm out in New York.

Maze: I don't mind these 90-degree days down in Atlanta, and I would take it anytime over the cold weather up in the Northeast.

Jenni: Yeah, yeah, well, listen, I know that we're keeping a close eye on the UPS strike in the next couple of days, and by the time we record this next podcast, we'll have a definitive answer for you on whether or not that July 31 deadline brought on a strike, brought on an extension, or possibly, and hopefully, fingers crossed, mutual agreements across the board. 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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