Summertime Heat in Transport
“When will it end?!” – A common question being asked by U.S. based shippers
COVID-19, produce season, and the 4th of July Holiday all played their parts in creating a very hot June for the U.S. Freight Industry.
As demand continues to outpace capacity, outbound tender rejects have risen dramatically year-over-year (YOY) across the U.S. Yes, the U.S. Freight Market typically sees an increase in volumes around this time every year, given the aforementioned events, however, a 145% YOY increase in outbound tender rejects, and a 25% YOY increase in outbound tender volumes has created some ‘noise’ in the freight world. What ignited this fire? You guessed right, the novel COVID-19 Pandemic.
As global economies progress further down the road to recovery from the effects of COVID-19, U.S. Imports continue to strengthen. Additionally, container-line schedules are providing extended insight into U.S. cargo demand. May and June saw YOY double digit declines in U.S. port inbound capacity – at approximately a 19% sailing cancellation rate. July is at approximately a 10% sailing cancellation rate, indicating a positive signal of demand and, more importantly, COVID-19 recovery.
Typically, the U.S. Freight Market softens immediately after the 4th of July Holiday. It is anticipated that that trend will continue in 2020. The question, though, is “by how much?” Given the market’s extreme YOY volume increase, it’s likely the market will maintain a level of YOY tightness through July and August. Although the market is experiencing positive signals, it is still in question how the social distancing efforts across the country will translate into economic recovery. That uncertainty will likely shift behaviors in production, inventory replenishment, and lead times.
So “when will it end?!” Until more trucks [and drivers] hit the road, the U.S. Freight Market could see elevated YOY trucking rates for the remainder of the year.
Whether you’re looking for a competitive quote, or have hot freight that needs to be moved, Traffic Tech – “The Hardest Working Team in Transport” is here to service all of your logistics needs!