March Freight Market Update

03/15/2022

March Freight Market Update

Stay up to date on the latest information on condition’s impacting the freight market, curated by Trinity Logistics through our Freightwaves Sonar subscription.

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Pain at the Pump

As everyone has felt the pain in their wallet over the past month with gas prices elevating, that increase is also felt on the diesel market. While larger carriers are able to lock in bulk fuel pricing and, at least for a short period of time, be somewhat insulated from fuel increases, the majority of the trucking companies out there pay at the pump. Drivers are dealing with $4 and $5 per gallon prices, with some states being above $6 per gallon for diesel. It is anticipated the cost of gas and diesel will increase further in the weeks ahead, most analysts predicting another $0.25 to $0.50 per gallon increase. Many of us have found ourselves paying an extra $10 or $20 at the pump when we fuel up. That cost is greater for the trucking community as big rigs get nowhere near the fuel efficiency we see in our passenger vehicles. For perspective, a 750-mile trip for a trucker that cost $450 in fuel just a month or so ago will pretty soon hit the driver’s wallet for almost $125 more. For shippers that traditionally deal with “all-in” rates, being able to accurately account for the additional cost of fuel is paramount. It’s certainly not avoidable, but instead of just agreeing to another $200 for the rate because that is what is being asked, have the discussion about the true increased costs and pay the fair amount.

Figure 1.1

Tender Volume and Rejections

If one were to look at the recent Tender Volume and Rejection Rate trends (figure 1.2) it could lead one to think rates would be on the decline. There has been some relief, but that does not mean it is across the board. One area we are seeing a tightening in is the flatbed market. Figure 1.3 shows the rejection rates for the three main equipment types, and rejection rates for flatbed shipments has seen an increase while rejection rates for van and reefers has been flat or in decline. In fact, the rejection rate for flatbed equipment is almost three times what it was last March. Flatbed activity is a great indicator of the strength of the construction and manufacturing sectors. Additionally, we are getting to that time of the year where seasonal shipping needs pull flatbed capacity, from produce to landscaping materials, not to mention warmer weather allows for new home construction to move at a faster pace. Bottom line- flatbed rates will reflect the increased need for capacity.

Figure 1.2
Figure 1.3

Port Impacts

Finally, as we look at activity surrounding the U.S. ports, there is concern of what could happen with the Russian invasion of Ukraine. There is the possibility it could spiral into a conflict involving NATO members, and this has heightened exports from European ports headed for the U.S. While the incursion in Ukraine will benefit ag exporters in the U.S., expect rates for containers, especially containers heading to the U.S., to remain at their current levels.

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