Freight Market Update April 30, 2021
Vehicle Safety Check – Mother’s Day – Produce Season
The Commercial Vehicle Safety Alliance’s Road Check, AKA DOT Blitz Week, is Tuesday, May 4 through Thursday, May 6. The focus will be on drivers’ hours of service and lighting on trucks. This does not affect MegaCorp’s vetted carrier partners, due to our in-depth screening process prior to partnership with a Carrier, but this will affect the market as a whole. Some Carriers will elect to keep their trucks parked rather than subject their drivers to the road checks. This hesitancy towards operating during DOT Blitz Week has historically removed thousands (temporarily) of tractor-trailers from rotation, which will diminish overall capacity and further increase shipping costs.
Another factor in the strain on market capacity in early May is Mother’s Day, which is Sunday, May 9. There is an annual uptick in shipments nationwide the week preceding Mother’s Day, in preparation for the holiday.
With the shift in consumer spending here to stay, the elevated volumes and tender rejection rates are well the new normal. This is the 9th week in a row with the tender index above 15,000, a number we weren’t even close to in pre-COVID times. The prior record in volume before COVID was before Thanksgiving in 2019 at 10,707.
As depicted in the second chart above, the Tender Rejection Index, one in four loads is tendered but not picked up nationwide. This is the 71st day with a Rejection Index above 25%. This stems from the overall capacity shortage and spot-rates drastically out-reforming contract rates, creating an inverted market. With produce season in full swing, shippers need to be prepared for record spot rates.
The manufacturing sector of the economy has continued to increase, despite these ongoing shortages in capacity. The Institute for Supply Management’s Purchasing Managers’ Index increased 64.7% indicating expansion within the industry and new orders up to 68.0, while a backlog of orders remains elevated at 67.5 on the index.
Flatbed shipping is increasingly becoming an area of concern. Prior to COVID there was a strain on flatbed capacity and with residential projects and new construction at an all-time high, supplies and capacity are further impacted with costs increasing weekly.
We know that these volumes are not going down anytime soon because imports continue to arrive in abundance, which contributes to costly shipments and tight capacity, especially in port markets.
Imports have been above the pre-COVID record for over eight months now, with no signs of slowing down. In fact, TEU volumes just set an all-time high, and many ports are expected to continue to break monthly import records with inventories still depleted and many shippers continuing to playing catch up. All of these factors will keep capacity at historically tight levels and this will be extremely evident in the first half of May. As always, Megacorp is here to help. You can rely on us in any market and trust that we will deliver.
Load to truck ratio from the prior day average.
The charts below are load to shipment ratios. For example, red indicates one truck for every 45+ shipments.
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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