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Realizing that this may sound like a broken record, freight volumes are still elevated. In fact, the current Outbound Tender Volume Index is roughly three percent higher year-over-year (YOY). Three percent may not sound like a lot, but keep in mind volumes were accelerating rapidly over the last several months of 2020. While the comps are more challenging as we get in the latter part of 2021, the volumes are still outpacing what they were a year ago.
As we look at rejections by equipment type (Fig. 1.1) we see that Reefer (orange) and Van (blue) rejection rates have retreated slightly, but Flatbed (green) rejection rates are on the upswing. As we are seeing sectors that rely heavily on open-deck trailers to move their freight (gas & energy, industrial manufacturing) increase production, this upward trend is expected to continue. Additionally, Heavy-Haul shipments, a sub-set of open-deck freight, are seeing capacity much more strained. The cost of new equipment and the struggle with getting new equipment as delivery dates slide, the lack of specialized drivers there are for this equipment, and higher demand has turned a normally fourth quarter slow-season into high gear for Heavy Haul freight moves.
Many had hoped for an easing with import activity, as ports are stretched with operations and equipment to handle the continuous assault of ships looking to off-load their freight. As seen by the Drewry index below (Fig. 1.2), spot rates out of Asia to both the west and east coast are roughly triple what they were a year ago. Right now, much of that freight is to satisfy current and future U.S. demand for the holiday season. Behind that will be inbound freight to replenish inventories. This has the potential to run through the first half of 2022. This could mean a normal slower volume of freight in the summer months, which will be just the opposite, and that could be up against labor contract negotiations that will take place between west coast dockworkers and terminal employers. And, not that another variable was needed, but as China potentially faces a start and stop economy with electricity shortages, that could further challenge port operations. Stay tuned.
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Stay up to date on the latest information on conditions impacting the freight market, curated by Trinity Logistics through our Freightwaves Sonar subscription. NOT INTERESTED IN READING? WATCH OUR VIDEO […]
Trinity Logistics, a leading third-party logistics (3PL) company, is proud to announce its earned recognition as a Top Company for Women in Transportation by the Women In Trucking Association for a fourth year. The Women […]