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Freight volumes continue to follow their normal patterns, albeit at elevated rates. Even with the traditional dip for the July 4th holiday, freight volumes remain 25 percent higher YoY (FIGURE 1.1) and 50 percent higher than what they were just a few years ago. Many were speculating a receding of freight volumes as people looked to spend their dollars on services instead of goods. While there has been a resurgence in spending on services, a recent report showed hotels at pre-Covid occupancy levels, Americans are primarily choosing to stay within the U.S. borders. This is not only good news for restaurants and hotels, and other industries that rely on tourism, but that means money is being spent on clothing to go on vacation, meals while enjoying their time away from work, and souvenirs to remember the trip within our country versus being spent abroad. And trucks are the means of getting those items where they need to be.
Adding to this will be the glut of imports as we are entering peak season for imports. As many schools look to re-open in the next month or so, there will be a need for school supplies and new clothing that has been almost non-existent in the past 16 months. And shopping for the end of the year holiday season is closer than we would like to think. A majority of these items will come through our ports, primarily from Asia. Additionally, the U.S. is further along in re-opening than most countries. As we see these countries begin to realize a sense of normalcy, that will only add to the goods entering the country from overseas. A recent publication from IHS Markit showed May’s Asia-U.S. container volume up 52 percent YoY (FIGURE 1.2). While those year-over-year comparisons will start to decrease (remember, mid-June is when the U.S. started to see import volumes elevate), it is anticipated July will show a 15% YoY growth, August 9 percent, and September 3 percent. These projections are higher than what was forecast just a month ago. No doubt pressure on the ports, drayage trucking services, local warehouses, and over-the-road trucking will continue.
While there are shortages of assets by which to move these goods, a big challenge is finding qualified drivers to move these shipments across the U.S. In a recent roundtable hosted by the FMCSA, several topics were discussed such as:
The trucking industry will look to under-represented demographic groups to boost their population, looking to recruit more urban, rural, female, and younger drivers. As drivers become more in demand, turnover rates will accelerate as drivers move from one fleet to the next for higher pay. Many small- and medium-size fleets have seen payrolls increase by 10 percent plus, with upwards of $10,000 sign-on bonuses being the norm. This will no doubt continue to keep truck rates high, with the spot rate for van freight just north of $3.30 per mile (FIGURE 1.3)
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Logistics experts estimate high freight rates will remain through 2022, so now is not the time to stress over costs. Instead, you should be focus on capacity, customer service, and communication.
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