The countries phased reopening took place during a time of intense seasonal upward pressure on rates. The higher rates we’ve been seeing in recent weeks seem to be aligned to the typical seasonal trends providing at least some piece of normality in what have otherwise been turbulent times for everyone.
The usual late spring / early summer produce harvests provided an expected lift, and businesses around the country are beginning to reopen, creating more demand for truckload shipments in recent weeks. However, we are not by any means back to business as usual. The pace of the recovery slowed last week, while the number of COVID-19 hotspots grew.
THE WEEK AHEAD
Even though some signals are indicating that markets are softening up a little bit, this does not necessarily mean that demand has dropped, it could just reflect that some additional carrier capacity that was shut down, is returning to the market to balance out the amount of demand that’s in the market.
The overall freight to truck ratio we saw is still seeing a lag to last year. Some markets are still looking hot, and as expected, we are seeing the market starting to cool off as might be expected heading into the post-produce season.
There is a definite trend of moving back to some normality. The Retail reports were much better than expected and we expect with the continued re-opening there is still a feel of recovery mode, but we would not expect that rates are going to keep on up to the peak during restocking.
We see there will be a short term demand all the way through to July fourth, where we’re expecting it to be a very slow growth up through July fourth and then post July fourth, there we believe that seasonal trends are going to reassert themselves and rates, which see peaking around July fourth, and then dipping down as we move into the slower days of summer is going to be the trend.
We expect rates to recede a bit and then come back in the fall and over the next few weeks. We will continue to be on the lookout for that second peak and its impact on the freight market.
VOLUME LOAD TO TRUCK RATIO
Volume loads to truck ratio is showing a definite signal the market has flattened.
Reefer volumes: on the spot market continued to climb. There was, as expected, a surge to an upward market trend for Reefers specifically on Produce Hot spot areas. However we are seeing overall the Reefer rate rally as normal heading further into June is starting to lose momentum with the cooling of the summer produce season, and we are moving to the post-peak slowdown, which will be favorable to shippers.
Flatbed volumes: on the spot market continued to climb, showing the greatest market demand for Flatbeds, on the West Coast, and southern Midwest and southern east coast. Looking at the market, we can see concentrated areas of high demand that have remained from prior weeks are still there. We’re just seeing a little bit of a general cooling off, especially in the California area, however, we do still see higher demand in South Texas, and Louisiana markets.
Dry van volumes: Loads to truck ratios did have a surge of all truckload shipments, however, load to truck ratio slipped compared to the previous week. Van lanes saw increased prices last week, but it was not overwhelming majorities that we saw in prior weeks. We see load to truck ratio for dry van rates are beginning to flatten out.
We have seen a little bit of a slowing down, stagnation, if you will, on the dry van side. As seasonally expected, we would not say that we’re completely done with our upward trend for the season, but it’s something we are watching closely coming into the next week or two.
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We will write again next week, with a new update and I would like to thank everybody for keeping America moving.