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A TICKING TRADE CLOCK

Import volumes continue to rise, but for how long? Since the 90-day truce with China in early May, U.S. ports have continued to see volumes that rival and surpass those seen over the past few years (Figure 1.1).  

While Chinese imports are a big driver of those volumes, they are not the only country feeding freight through our borders. A year-over-year (YoY) increase of four percent in shipment volume from China is nothing to sneeze at, but countries like Vietnam (52 percent YoY increase), Thailand (51 percent), and India (43 percent) have become more pronounced in their shipment volumes destined for the U.S.  

With the 90-day pause now being extended until August 1^st, it’s anticipated that volumes will remain elevated, but if tariffs are re-instituted, expect to see blank sailings and less volume coming through our ports, particularly the West Coast.

NOT YOUR AVERAGE SUMMER SLOWDOWN

While import volumes continue to surge, that volume is not translating to over-the-road shipments for the trucking industry.  

As Figure 2.1 shows, the outbound volume index has remained relatively flat with the normal peaks and valleys for holiday periods. One area we are closely watching is the movement in the tender rejection index, the rate at which carriers are saying “No thank you” to shipments being tendered to them.  

During the latter part of June and early July, rejections trended upward, cresting the eight percent mark. While that has seen a dip in the past few days, as have volumes, it’s anticipated to rebound to those levels in the coming weeks. 

As most Americans tend to do, truck drivers also take advantage of the summer months for vacation time.  Combined with the continuing trend of carriers leaving the market, and the still-to-be-determined impact of the English Language Proficiency mandate and enforcement, even if freight volumes are stagnant, less drivers to haul those shipments will cause rejections, and most likely rates, to rise.

REJECTION TRENDS BY EQUIPMENT

And speaking of tender rejections, not all rejections are created equally. There are many factors that influence a shipment being rejected by a carrier, one of which is the equipment required.  

As Figure 3.1 shows, the rejection rate for shipments requiring a van (blue line) have been relatively flat. Flatbed (white line) capacity was a struggle in the spring months, but while still relatively high, at 15 percent, much less than what was experienced a few months ago.  

Reefers continue to slowly trend upward, and produce seasonality has an influence this time of year, with one out of every nine shipments seeing the carrier reject the shipment opportunity. 

Understanding what the trends are by equipment type will help as you are working on spot versus contract priced shipments.

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