December Market Update 2021
Year-End Capacity Crunch and New Mandate
As expected, outbound tender volume dipped after the Thanksgiving holiday, which is in-line with historical trends. Volume has since climbed back to the “new normal” which is about 50% to 60% more tenders than pre-pandemic times. We expect to closely follow last year’s tender volumes as we move through the end of 2021. The truckload industry as a whole has been trending just over 5% less volume than the same time in 2020.
After starting the month of November around 22%, the national Outbound Tender Rejection Index (OTRI) fell to 19.7% the week after Thanksgiving. This marks the first time since July 31, 2020, that outbound tender rejections have fallen below 20%. This decrease in tender rejections is not here to stay throughout December—rejections will rise until Christmas.
As fewer spot loads were tendered over the Thanksgiving holiday, carriers were less likely to reject contract loads and fulfill the original pickup as scheduled. This led to flat spot loads while contract rates increased for December because the spot rates will only remain flat temporarily and will continue to increase as we approach the holidays. The contracting service windows, along with shrinking driver availability, will create an urgent need for spot coverage to keep up with demand.
Orange = Spot rate trends
Blue = Contract rate trends
US and Canadian Mandates to Impact Cross-Border Supply Chain Carriers
As of January 22, 2022, truck drivers from Canada and Mexico will be required to show full proof of vaccination against COVID- 19 before crossing the border into the United States. According to the Canadian Trucking Alliance, this could have an immediate impact on roughly 22,000 Canadian drivers. The CTA also predicts another 16,000 US drivers could be impacted when on January 15th, a similar Canadian mandate takes effect. The Canadian mandate will require U.S. drivers going into Canada to show proof of vaccination to be granted entry. A recent survey conducted by the Private Motor Truck Council of Canada found that 67% of drivers were unvaccinated out of the 35 Canadian fleets that participated. Some Canadian carriers, such as Montreal-based Fuel Transport, are paying out a CAD $10,000 bonus to any driver who is or gets vaccinated by January 15th. MegaCorp is working with its cross-border carrier partners to gauge compliance and the potential impact this could have on cross-border capacity industry-wide.
Maritime Shipments and Ports
Vessels waiting to dock at Long Beach and Los Angeles have thinned to 40 boats from their peak of more than 80 in late October (image courtesy of Getty Images). While this appears to be positive news it does not take into account the policy that went into place on November 16th stating ships crossing the Pacific had to wait 150 miles offshore for a slot to unload their cargo, and boats traveling north and south were asked to sit 50 miles out. So even though 40 ships were sitting close to the port, there are currently 56 additional container ships sitting just out of sight waiting their turn to port. This new policy helps with the ease of getting ships in and out of the ports and helps with air quality, although the bottlenecking at the ports and supply chain congestion will not be resolved due to this policy. As always, MegaCorp is here to help. You can rely on us in any market and trust that we will deliver.
About MegaCorp Logistics
MegaCorp Logistics, founded by Denise and Ryan Legg in 2009, specializes in full truckload shipments (dry van, refrigerated, flatbed, etc), less-than-truckload, and intermodal shipments throughout the US, Canada, and Mexico. MegaCorp is committed to creating long-term, strategic partnerships with our clients who range from Fortune 100 companies to regional manufacturers and distributors. We serve all business sectors of the US economy including (but not limited to) food, retail, government, textiles, and metals/building materials. We strive to offer the best to our clients, transportation partners, and employees– It’s the Mega Way! You can trust that we will deliver.
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