This year everyone has faced very challenging and uncertain times, every week we try to share our perspective of what is happening in the freight market to help shippers in their logistics and supply chain planning.
Over the last few months, we saw very high spot market rates increase, however last week we did not see a major move in freight volumes, carrier capacity or spot rates, instead, we saw a very small, a few percentage points of rates coming down and an overall leveling off. Saying this spot market rates remain very high compared to this time last year.
While shippers, carriers, and freight brokers have worked very hard to prepare for the peak season, making adjustments and plans, to put together and execute their operations plans for Q4, this may have placed some relevant level of stability in the market.
We also saw the number of rejections by shippers on carrier rates go up, while some carriers have been trying to push the barriers with above-market rates.
This leveling off in the market may be due to shippers raising their prices in their contracts with carriers, meaning reducing freight volumes going onto the spot market. Shippers need to keep on their carriers and ensure available capacity as we move into what could be a critical quarter for them.
Normally in a loose market truckload and intermodal capacity do not influence each other’s rates that much, where Intermodal is normally booked in advance, capacity is much more controlled than truckload and Intermodal rates remain stable. However, this year’s capacity tightness on intermodal has impacted truckload long haul capacity.
This year we saw the increase in consumer retail spending that affected the truckload market as opposed to other industrial sectors, and also with the increased imports from the Los Angeles and Long Beach ports, intermodal rates were pushed up and capacity tightened, which with the lack of intermodal capacity being available this impacted the demand for truckload long hauls, and so many shippers have been struggling to meet their unexpected demand.
Intermodal normally has its peak season between August to October where businesses are getting ready for the peak season for about 3 months. While everybody begins to get ready for the retail peak, we are still seeing a lot of maritime imports in the months to come, that has not slowed down at all this year, while shippers are still working on inventory being available to meet the demand.
So as normally we see December is a quiet time for intermodal, and intermodal begins to get more organized and adapted to the demand caused this year, we expect there will not be a slow down or downward trend for intermodal demand going into December. While normally intermodal demand slows down during December and January, the demand for imports has continued to increase and the data is showing a continuous flow of incoming containers going into Q1 2021. So right now there are no indicators of a downtrend.
Trucking companies are adding more capacity; we are seeing a growth in the number of truck insurance policies that have been going up since September meaning carriers are adding more trucks to their fleet. We have seen new truck orders increasing and used trucked orders firming up.
There is also a higher demand for power only and drop trailer projects, we have seen the number of trailer orders by carriers increase last month. Shippers are looking to improve the flexibility of their supply chain and are working to implement more efficient programs within their facilities. When you think about the shipping process, there is a time when the freight is ready to load, there is a time when workers are ready to load that freight, then there is a time when the truck actually shows up. If shippers loading staff are waiting for a truck to show up to do their job, then the shipper is at the mercy of traffic and the highway, so shippers are really now looking to implement programs that are much more flexible and efficient in the freight flow inside of their facility.
This is now becoming much more important in Q4 of this year as shippers need to respond faster to meet the higher consumer demand.
Make sure to contact us if you need any assistance with moving your freight. Simply send us the freight requirements and we will do our best to find you the capacity that you need.
Thank you so much for being with us today, have a wonderful day, and stay safe.