Last week’s industrial production results published by the Federal Reserve reported a 0.4% increase in November. Production has been steadily improving after dropping 16.5% in March and is now around 5% below its pre-pandemic (February) reading, still down 5.5% y/y. In the manufacturing sector, the biggest component of industrial production, increased 0.8% in November for its seventh consecutive monthly gain.
Contributing significantly to the increase in factory production was motor vehicles and parts production, which increased 5.3% m/m as the nation's automotive and parts plants increased production, which in turn creates demand for dry van freight.
Outbound load volumes increased last week in four of our top 10 freight markets, although spot rates dropped for the third week in a row in all top 10 markets -- a sure sign capacity is beginning to loosen.
Top 10 volumes were down on average 3% w/w, but up 21% w/w in Elizabeth, NJ (#3) and down 6% w/w in Atlanta (#1).
Spot rates in all top 10 markets dropped this week down on average $0.06/mile. Port congestion on the West Coast has driven warehouse capacity to its limits slowing down the unloading of more recent imports. As a result, load post volumes continue to decline in Los Angeles (#15) and Ontario (#14), which were down close to 8% w/w with rates also down $0.14/mile in both markets.
Even though load post volumes on the spot increased in the last full shipping week before the holiday break, Dry Van spot rates decreased by $0.03/mile to end the week at $2.22/mile (excl. FSC). Rates remain up 33% y/y and $0.55/mile higher than the same week in 2019.