Mid-November Freight Lifts Truck, Rail Rates

Freight is booming in mid-November.

Rail intermodal containers have been increasing rapidly for the past month. Spot market truckload freight availability is more robust than it’s ever been for the fourth quarter to-date. And both van and reefer rates are responding to the pressure, yielding national average rates that are 5¢ higher than last year at this time.

I called a few customers today, to see how they are faring. One fleet owner in Nebraska told me: “We are so busy, we can barely keep up.” A 3PL in Minnesota said: “Times are good. Freight is moving freely and frequently.”

Not that we’re complaining, but… why the abundance of freight? Why now?

One possible reason is that retailers have been slow to stock up for Thanksgiving and Christmas, so they are moving freight through the supply chain in fits and starts.

Retailers, as well as their vendors, have taken advantage of new logistics models that enable just-in-time inventory management. Until recently, a retailer would complete the order for all Christmas items before the end of the second quarter, for delivery to the distribution center by late September. Now these orders — as well as the underlying logistics — can be stretched out almost until Thanksgiving. Popular items can still be re-ordered and stocked in time for last-minute shopping and gift card redemption in December and January.

These tactics are coming into play this year, in particular, because Thanksgiving is late, shortening the critical shopping season by six days compared to last year. Retailers will not have enough time to replenish inventories between Thanksgiving and Christmas, so they are stocking up on popular items in advance. Many are touting pre-Thanksgiving sales, with special pricing to lure “early bird” Christmas shoppers.

We’ll know more in the next two weeks. For now, transportation and logistics companies are enjoying the extra business. If you were planning a vacation this month, consider postponing until January. Maybe you’ll start a new tradition!