Tender Rejections and Volumes Increase
The time of year we have talked about for months is now upon us. Buckle up because this holiday season is going to be one for the record books. We know consumer spend has drastically shifted this year due to the pandemic, thus adding more freight to the market than anyone could have predicted at the beginning of the year.
Heading into this holiday season, on November 1, there was already 55.8% more freight making its way through the supply chain than this time last year (the index was at 15,467.76 on 11/1/2020, compared to 9,923.38 on 11/1/2019). For a typical year, freight volumes increase by 10% over the three weeks in November leading up to Thanksgiving. This means we should prepare to have freight indexes into the 17,000s two weeks from now, right before Thanksgiving. However, with spend being so different than last year, we predict the record to hit closer to the 18,000 mark due to the rate of the increase we have seen thus far in November.
On one hand, this is great news because consumer spend continues to increase. Unfortunately, on the other hand, it is unsettling news for the already extreme cost of shipping which will continue to climb in the upcoming weeks.
With so many extra loads on the road, coupled with spot rates out-pricing contract rates, tender rejections are climbing too, even despite the slight increase in contract rates. As of yesterday, November 9, the tender rejection rate was 27.05%. This will climb to over one-third of loads being turned down by carriers over the next few weeks, as there is not enough capacity and drivers to cover so much additional freight. This number will climb again int the end of the year as carriers take time off for the holidays, leaving even less capacity on the road to complete the holiday push.
Capacity constraints are only projected to get worse through the end of 2020. MegaCorp continues to flex with the market by scaling-up our operations department, increasing our carrier development efforts, and integrating additional technology to increase capacity for our clients. We are confident in our ability to execute on our promise to deliver no matter the market, lane, or number of picks and drops. We want our clients to grow and succeed and we want to be the partner to accelerate their growth!
Load to truck ratio from the prior 7-day average
MegaCorp Logistics, founded by Denise and Ryan Legg in 2009, specializes in full truckload shipments (dry van, refrigerated, flatbed, intermodal, etc.) and less-than-truckload 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!
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