Freight Insights for Week of April 19
The following insights are taken from a weekly discussion between Sunset’s nine US/MX branches.
Trends and discussions range from seasonal manufacturing and agriculture trends that affect available capacity to general insight into outside factors affecting freight volumes.
Below is a summary of the April 20 call:
FREIGHT VOLUMES & CAPACITY
- Diesel FSC average at $3.124 this week, down .005 week-over-week. Analysts expect prices to hold for another 3 weeks, then start to climb. Prices for diesel are .644 cents up YOY for the US average.
- Reefer – rejection rates started to trend downward, and while contract is beginning to see pressure releases in costs, spot freight remains extremely high. Movement to coastal areas and NW for inbounds is seeing an uptick. New storms coming into the NW area this week are supporting a short term spike in rates for the next week given the cold front. Hardest hit area not expected is FL, and while rates normally decline for IB during produce season, the tight market coming into the year has kept the pressure high and both IB/OB freight is staying at high costs.
- Dry Van – capacity is shifting to the south with capacity issues in port areas and heavy produce markets. Currently FL and S. California are getting hit the hardest for opportunities. Demand is high and rejection rates have leveled out over the past couple of weeks, but are now experiencing tightening and an upward rise.
- Flatbed – Produce/Steel/Lumber all competing. Home construction is rebounding and demand is driving capacity constraints. Prices are starting to rise, as prices are expected to start rising fast for freight over the next few weeks; preliminary figures show close to 161% cost rise by 6/1. The current decline was driven by crude oil inventories, with a demand shift increasing since the beginning of the pandemic.
- Ports – container rates are at an all-time high in history, and ports are significantly congested. Due to unload timing for imports, shippers are choosing to move and distribute across other major port options. This is helping with some of the imbalance in high volume areas. Port of Montreal on partial strike and getting close to full strike. This is Canada’s second busiest port, so a full strike has a high risk for import impact.
- Rail – rates remain high and are expected to climb in all of the high density areas (super cities). Heavy port inbound US causes a lack of container rotations, so companies are beginning to charge round trip for rail usage.
- LTL – cargo shipping prototypes are being designed for air freight demand and should be tested as soon as mid-June. Rising jet fuel prices are putting pressure on freight movements by air, tied with a shut down of a large group of 737 models by Boeing due to an engineering flaw is not helping the already tasked industry and record setting air cargo growth this year. Air freight demand is at record highs as manufacturers are looking to find alternatives to port congestion and coastal capacity concerns.
- Outbound volumes began to climb last week, tightening Midwest/South/S. California areas the most. Expect spot rates to remain high through the end of June based on forecasts. Transportation is beginning to feel the crunch in lack of parking and warehousing space, with truck parking fees in private and public sectors expected to rise. To keep up with pandemic recovery, manufacturing trends will start to change the industry soon as companies are looking at changing supply chains towards more localized regions, creation of JIT (Just in time) modifications to reduce warehouse need and spend, transport mode shifts and diversification (rail/air/truck) to capitalize on any savings possible in a sector, and increases in risk for payment issues with the extension of customer payment terms and rise of bankruptcies expected by fall.
- International Road Check Week 5/4-5/6. Carriers are preparing fleets ahead of the blitz and some are preparing to remove them off the road for that duration of time. Be mindful of loads that will pickup early for long hauls, extra shut downs or holding loads, causing late deliveries during that timeframe.
- Weather Updates:
- Snow spread across Midwest mid-week heading NE with average at 2” drop, but minimal accumulation. Denver is the only area expected to get 5-8”.
- Rain and high winds are expected to move across the US this week starting Thursday evening with another large front and very heavy storms forecasted for early next week.
- Several laws and regulation changes are being discussed that could impact the industry. There is a proposed Bill in the House reviewing allowance for younger drivers to be allowed full Class A driving certification, down to the age of 18. Trucking parking Bill is under review by the House to allocate additional budgeting for domestic parking options for the industry. Transportation Infrastructure funding measure is at the halfway point in legislation, and received several modifications for future movement. NTSB is looking at industry standardization for collision-avoidance technology drawing light to a recent upswing in accidents and trend analysis.
- Others pending – California CARB laws 5/1. Biden’s Transportation Review/ ABC test/ DOT HOS Changes/ FMCSA policy changes and regulatory review. Emergency Declaration extension to May 31, Commercial Driver Panel, Drug and Alcohol Clearinghouse.
Industry data is pulled and summarized weekly from key proprietors and industry experts using multiple publications and sources. Some examples of the publications used are Freightwaves, Transport Topics, American Shipper, American Cranes & Transport, FMCSA, DOT, SC&RA. The information is discussed with Sunset Managing Directors and validated prior to publication of summary data in this posting.