June 16, 2020

The Spot Rate Trends

As shippers continue to re-negotiate for the contract market the spot market is seeing a very slow uptake. With the disruptions caused this year it is very hard to say where the spot market will go to during the normal summer peak seasons.

We are seeing the Spot Market Truck Freight Rates out of California continue to ask above $2 per mile which we see as higher than this time last year. We are seeing a very slow but positive change to market conditions.

With the lockdowns easing and a return to slow openings of businesses across the USA, the import of shipments from Asia, especially to LA ports are looking healthy. We are also being told especially in the Frozen Foods market.

With the reduction in capacity that has been taken out of the industry during this last year, and the weak volumes that have covered that, the shape of the summer surge with consumer demand and of port imports activity slowly coming with a prolonged return, it is possible that this summer peak will be different to previous years during July and August peak seasons.

As we have normally seen greater freight demand in June and then slowly calming down in July and then seeing that demand fade out during August, this year a change to previous years may occur if we have no further drastic disruptions to the economy re-opening.

We are seeing a gradual increase in demand and we are at the point where the market may flip quickly or it may reverse slowly. We are waiting to see the response of the economy if there is going to be a second wave, and whether manufacturing does begin returning.

Market data seems to be showing the economy has bottomed out and we are improving, so that should help in demand and return to some normality for the freight industry.

We are keeping an eye on the data; we saw the panic buying end of March, which pushed market demand to an uptrend very quickly. One of the areas we are keeping an eye on to give us a better understanding of the market sentiment is the Reefer short hauls, which give us a good understanding of the grocery inventory replenishment, because that may be a good indicator of consumer sentiment.

It will also be a good indicator in the coming months of people’s willingness to return to sporting events, to travel by planes, stay at hotels, and generally stay out at crowded locations. This all we know is going to be variable across the country, depending on the political environment of the region, and the severity of the pandemic.

Summary of USA’s hottest markets in freight demand:

  • Los Angeles has been strong,
  • Atlanta has been strong,
  • Dallas has been getting stronger,
  • Chicago, rates have been staying lower, and especially rates from Chicago to Atlanta due to Atlanta being strong on the return rates.

We are happy to see better to good news coming out from different regions of the country but we are still in a very unpredictable period as it continues to be very difficult at this moment to predict the direction of the market.

Get in touch and we’ll be delighted to discuss your specific needs. If you prefer to make a more personal connection, simply give us a call, (888) 454-9022 to understand how we can support you. We'll be happy to hear from you! You can learn more about us at https://amerimgt.com/

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AMI

Ameri Management, Inc. (AMi) provides American businesses with high-quality, reliable, and affordable Freight Broker related services. Regardless of the type of business you run or the kind of products that need to be shipped, AMi has the right carriers for you. Our Freight Broker related services specialize in moving Full Truck Load (FTL), Less Than Truck Load (LTL), and Intermodal freight across all states in North America. Our years in the industry has helped us gain the experience, tools, and the dedicated carrier relationships needed to offer first-class Freight Broker related services.

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