Freight Volumes and Costs at Historical Highs, Again
As COVID restrictions lift across the United States, freight volumes are holding strong at near-record levels. With the drastic shift from service-based, consumer spend to product-based demand and spend during COVID, some analysts predicted that freight volumes and costs would decrease when America opened-up. However, we saw the contrary and anticipated that this trend of elevated freight volumes would be here to stay for months after America opened back up. Our predictions have proved to be true as we continue to see consistently high freight volumes and costs. For the 13th week in a row, tender volumes are above 15,000 and during the same week in 2019 and 2020 the index was averaging just under 10,000.
With ballooned costs, an abundance of freight, and a driver shortage, it is no surprise that the Tender Rejection Index still shows 1 in 4 loads as tendered but not picked up. As depicted in the Tender Rejection Index chart, the current tender rejection rate is 24.48%. This is the 43rd week in a row the Rejection Index is above 20%. These factors have formed a “spot-dominant” market where spot rates are out-performing contract rates for all equipment types, which creates an inverted market, further elevating costs. It will stay like this through the summer because produce season will keep refrigerated capacity tight, the summer building season and the backlog of construction projects will keep flatbed capacity tight, and the backlog and at the ports followed by the distribution within the U.S will keep van capacity tight.
The ports are still backed up due to the demand for products/parts manufactured abroad. The Port of LA has been receiving 900,000 units a month. As of Tuesday, in San Pedro Bay (Long Beach), there are 20 ships at anchor meaning that the port is full of ships, getting unloaded, and there are still 20 waiting to unload. At the Oakland Port, as of Wednesday, there are 10 ships at anchor in San Francisco Bay, with over 15 ships off the coast, waiting to anchor. The east coast ports are experiencing the same flow of arrivals. These factors will keep capacity at historically tight levels and record-breaking freight costs. As always, Megacorp is here to help. You can rely on us in any market and trust that we will deliver.
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.
For a shipping quote, please CLICK HERE.