What Goes Up Must Come Down. Freight availability and rates have been seesawing up and down for weeks, following changes in the weather. A big storm hits, and traffic stalls -- literally -- until the roads are cleared. Then there is a burst of activity, due to pent-up demand. Just as rates start to settle into some kind of equilibrium, another storm rolls in and the cycle begins again.
Trucks Get Stuck. The impact of this extreme weather is felt in different ways. Road conditions are unsafe, so trucks don't move and businesses are closed. Sometimes the bad weather keeps freight from leaving the origin market, but recent storms have shut off access to major destinations -- those big population centers along the East Coast and in the Midwest.
Outbound Rates Fall. The trucks that do manage to deliver their cargo may not be able to get home again. If you own a home improvement store in New Jersey, you don't want to be out of stock on snow blowers right now, so you're willing to pay a premium for that truck. That rate goes up. But there is not much freight available to load up that van for the return trip, and the trucker doesn't want to drive empty. That rate goes down.
Inbound Rates Rise. The inbound rate was higher than the outbound rate to begin with, so the round-trip rate may go up. Add up all those round trips, all over the country, and the average rate for vans rises -- last week, it added a penny, to $1.95 including fuel. Van rates are holding up, as are reefer rates, with both segments remaining well above last year’s rate levels.
Cancel Now, Re-Schedule Later. More loads are being offered, and there may be an increase in freight availability -- but there are also a lot of loads that are getting canceled and re-scheduled, so they are re-posted later in the same week. Underlying freight levels don't seem to be especially strong, according to our customers. It's just that demand appears to be elevated because of the on-again, off-again nature of the weather patterns and resulting disruptions in the supply chain.
Underlying Trend is Down. What's really happening, underneath the surface churn? Beef production has been sharply down since just before Christmas and is not recovering. California has slowed recently and joined Florida as one of the toughest states to find outbound van freight. The Port of L.A. did have a back up of inbound ocean traffic, due to the MLK holiday, so it may appear to be improving this week. Produce shipments from the Golden State are also slowing, due to drought and other factors. The strong areas for produce are currently the border crossings at Nogales, AZ and Brownsville, TX, for Mexican-grown fruit and vegetables.
Flatbed freight is still moving well in the interior of the U.S. Export volumes are also showing up at Southeastern ports, but imports are soft on both coasts.
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Categories: Rate Trend of the Week