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Winter Weather Continues its Assault 

on U.S. Freight Movement

February 16, 2021

The Choptank Weekly Market Brief is offered exclusively to Choptank Transport customers to provide accurate, timely and relevant freight market information.  The contents of this brief are collected from reputable sources including DAT, Freightwaves/Sonar, Truckstop.com, the Department of Labor, the Department of Transportation, and other sources as cited throughout the brief. 

Record low temperatures across much of the United States, including extremely dangerous ice storms, have disrupted shipment schedules and put pressure on rates (especially in the reefer market). Ice coated roads and downed powerlines from Texas to the Ohio Valley caused multiple interstate accidents, power outages and unsafe driving conditions. 

 

Another victim of the cold has been the oil industry in Texas, where Motiva, the largest refinery in the United States, has closed due to cold weather-related problems. Others, like ExxonMobile in Beaumont, reportedly have closed as well. This is likely to affect diesel prices which have already been inching up since January. 

Ice Storm 3 days ago

Railroads are also concerned about delays due to the weather. The same problems that stall out over the road trucking in severe cold weather events also put trains at risk. CSX, Union Pacific and BSNF are warning of service disruptions over the next few days. 

Forecast this week

Number of the Week
600,000

The daily number of barrels produced at Motiva
oil refinery in Port Arthur, Texas (that are not being produced during the shutdown). 

Less-Than-Truckload Market

LTL rates are going up, according to article in Freightwaves. Some carriers have already announced general rate increases to go into effect in late February and some, on March 1. The increases are in the neighborhood of 5%-6%, depending on the carrier.  Read more.

 

Rates for truckload shipping are also rising. Our blog post on Thursday will shed some light on the two main factors responsible for pushing rates up. 

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Ports

The port situation has not improved since the beginning of the year. The average wait time for anchored ships off of Los Angeles and Long Beach coasts is 11-12 days. This is the same amount of time it takes to get from China to the United states.  

 

In a recent article in American Shipper, Greg Miller said, "As of Thursday, there were 25 container ships at berth in Los Angeles and Long Beach. Thirty-two container ships were at anchorage. That’s roughly the same level that has been at anchor since the beginning of this year. (The record of 40 container ships at anchor was hit on Feb. 1)." As a result, some shippers are opting for more expensive, but swifter, air freight options.

Port Screen shot

Chart data: Marine Exchange of Southern California. Data bi-monthly Jan 2019-Nov 2020; daily Dec 2020-present, as shown in American Shipper

Van Capacity

v cap

Reefer Rejection Rates

Reefer outbound tender rejections have been hovering in the 40%-41.5% mark over the last several days while volumes have been on the upswing. With the forecast calling for additional widespread snow and ice this week (from winter storm Uri), volumes and rejection rates will be especially erratic. Those moving freight both south and east of Atlanta should not be affected by this storm.

Reefer Capacity

reef cap

Flatbed Capacity

Flatbed capacity is still extremely tight in comparison with reefer and dry van market conditions. Rates will be highest and capacity tightest in the red areas of the map.

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Outbound Tender Rejection Rates 

The chart below shows Friday's national outbound tender rejection index for the Northeast, where weather was playing a significant role in the market. The different colored lines represent different areas of the country. 

Mountain Prairie (Pink) includes CO, KS, MT, ND, NE, SD, UT, WY

Midwest (Purple) – includes IA, IL, IN, MI, MN, MO, OH, WI

Northeast –(Blue) – includes CT, DE, MA, MD, ME, NH, NJ, NY, PA, RI, VA, VT, WV

Southwest Region – (Yellow) – includes AR, LA, NM, OK, TX

West Region – (Green) includes AZ, CA, NV

(Chart courtesy of Freightwaves/Sonar)

OTRI-1

Outbound Tender Volumes

Outbound tender volumes are trending slightly downward but not to any significant degree. Although the chart below looks like rejection rates have dropped, the national average is still very high at 21.20, most recently affected by the nation's disruptive weather events. Once the storm systems subside, we should experience a drop in rejections, according to Freightwaves. (Chart courtesy of Freightwaves/Sonar)

OTVI

Who's Got the Power?

The DHL Pricing Power Index gauge seems to be stuck for the third week in a row at 70, favoring carriers in negotiations. 

The pricing power index is a weekly gauge put out by DHL that indicates who has more sway in negotiations when it comes to pricing and freight rates. The farther the needle leans to the left of the gauge, the more power the shipper has in negotiation. The farther to the right, the carrier has the upper hand. (Source: Freightwaves)

dhl-pricing-2-15

Spot Volumes Rise Again, But Rates Move little 

(Below stats from February 8 - 14, 2021)  The spot market was sabotaged by Old Man Winter as well. Rates went up as winter storms approached and shippers push out as much freight as possible before the events.  

Overall Spot load posts rose 15.6% w/w, - 0.4% m/m and up 67.9% y/y.

Dry van: Load-to-truck ratio rose 29.1% w/w, -11.7% m/m and up 92.0% y/y.

Dry Van Spot Rates: Rates are up 2.5% w/w, -4.1% m/m, and up 25.7% y/y.

Reefer: Load-to-Truck ratio is up 28.2% w/w, down -4.3% m/m, and up 54.4% y/y.

Reefer Spot Rates: Rates up 2.8% w/w, down -2.5% m/m, and up 16.2% y/y.

Fuel prices have risen by 0.7% w/w.

(Source: DAT Trendlines)

spot rates-2-16

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February's Icy Temps Cause 
Temporary but Measurable Disruption

February 9, 2021

The Choptank Weekly Market Brief is offered exclusively to Choptank Transport customers to provide accurate, timely and relevant freight market information.  The contents of this brief are collected from reputable sources including DAT, Freightwaves/Sonar, Truckstop.com, the Department of Labor, the Department of Transportation, and other sources as cited throughout the brief. 

Winter storms bringing cold temperatures, snow and treacherous driving conditions to the Eastern United States and other areas have been the disrupting force over the past week and most likely will continue to do so into this week with more bad weather ahead. Snow and ice removal at loading docks is fouling up the works and creating delayed deliveries and additional congestion. 

ICE ROAD TRUCKERS TAHOE_  Raw CHP video of a harrowing down Highway 80 summit by a Fedex truck-1

 

Video (2:33) - An Example of Amazing Truck-Driving Skills! 
Winter Weather can Wreak Havoc on the Supply Chain


Number of the Week

56,000 is the number of truck driver violations in 2020 cited by the FMCSA Clearing House

(read full story)

"Of the 45,000 driver violators who lost their jobs due to the violations, 34,000 have not yet completed the return-to-work program," adding to a shortage of drivers and tight capacity.


Market Conditions This Week

Freight demand remains strong on the national scene but with less volatility over the past several weeks than we have experienced previously. Load posts are up by 4.6% over last week on the spot market, and spot rates have held steady. 

 

The maps below show capacity across the United States. The dark red and pink areas (hot spots) indicate capacity is tightening. The top map displays dry van capacity and the bottom map, reefer. Rates in the darker red areas typically will be higher than in blue areas.

Van

  • Dry van capacity has loosened in the Western half of the country this morning, but remains tight in areas of the Ohio Valley, Mid-Atlantic and several Southern markets. The nationwide map below shows the big picture. The map below it shows the MCI (Market Conditions Index) in the Philadelphia area where capacity is very tight with a load-to-truck ratio of 4,204/823

Van Market Conditions Nationwide

van conditions

Market Conditions - Van, Philadelphia Area

Philly market

Reefer Market Conditions 

  • Temperature-controlled freight is still seeing tighter capacity across the country than van, although van makes up a much larger portion of the market. In the nationwide capacity map below you can see that Little Rock, Arkansas, is a tough spot for capacity, as evident from its load-to-truck ratio of 1467/47. Even more significant is the Miami market, where the load-to-truck ratio is 4952/280

Reefer Capacity Map Nationwide

Reef nationwd

Market Conditions: Reefer - Little Rock, AR

Little Rock 1457 47

 

Market Conditions: Reefer - Miami Area

Reef Miami 4952 280

Market Conditions: Flatbed, Nationwide

Flatbed capacity is still extremely tight in comparison with reefer and dry van market conditions. Rates will be highest in the red areas of the map.

Flatb

Orbit_banner3"Our advanced analytics is changing how we make decisions, from who to call first to how we think about the future.” - Director ofData Science & Analytics, Choptank Transport

Outbound Tender Rejection Rates

The charts below show the outbound tender volume index and the outbound tender rejections in the contract market.

 

National outbound tender rejection rates for reefer freight shot up this week as the blast of cold air dipped down from Canada. Shippers who normally don't require temp-controlled shipping services, such as beverage and paint manufacturers, suddenly are forced to take extra measures to safeguard their freight from potentially freezing. This week's cold air made rejection rates skyrocket to more than 78% in the Little Rock area (as highlighted in the market conditions map previously), as well as many other markets, from Fargo to Indianapolis to the Pacific Northwest.  

 

The chart below shows Friday's national outbound tender rejection index for reefer and van combined compared to the last two years.

OTRI

Outbound Tender Volumes

Overall outbound tender volumes showed a slight decline in January and have flattened over the last few weeks, but still remain far above the previous two years. It is hard to tell if this elevated demand will hold out until we see more states opening back up and the arrival of warmer weather, triggering the customary spring uptick in freight volume. 

OTVI Feb 6

Less-Than-Truckload Market

Most of the primary LTL carriers reported an increase in both the number of shipments and the tonnage in Q4 of 2020. Inventory levels remain low in 2021 and the expectation is that LTL volumes will maintain current levels or become elevated as manufacturing catches up. Rates in 2021 are expected to increase anywhere from the high single digits to lower double digits, according to a story in Supplychain247 . The Purchasing Manager's Index (PMI) at 58.7% in January is a good indication that the LTL market is poised for strong growth this year. (Graph and chart below courtesy of Institute for Supply Chain Management) 

Need an LTL rate quote?

PMI January 2021

Manufacturing

Manufacturing has a significant impact on the freight market. Any reading over 50 signifies growth. Any reading below 50 is an indication of manufacturing's economic contraction. According to the Institute of Supply Chain Management's Report on Business, in January, "Five of six of the biggest manufacturing industries — Chemical Products; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Computer & Electronic Products, expanded." 

Manufacturing-1

Who's Got the Power?

The DHL Pricing Power Index gauge stayed the same as last week at 70, favoring carriers in negotiations.

The pricing power index is a weekly gauge put out by DHL that indicates who has more sway in negotiations when it comes to pricing and freight rates. The farther the needle leans to the left of the gauge, the more power the shipper has in negotiation. The farther to the right, the carrier has the upper hand. (Source: Freightwaves)

dhl-pricing-2-8

Spot Volumes Rise Again, But Rates Move little 

(Below stats from February 1-7, 2021)  Load posts saw a slight upswing last week with only marginally affected rates. Shippers are trying to get inventories restocked ahead of the Chinese New Year, and before the threat of more winter weather. 

Overall Spot load posts rose 4.6% w/w, - 0.4% m/m and up 67.9% y/y.

Dry van: Load-to-truck ratio rose 5.1% w/w, -11.7% m/m and up 92.0% y/y.

Dry Van Spot Rates: Rates are up 1.3% w/w, -4.0% m/m, and up 25.8% y/y.

Reefer: Load-to-Truck ratio is up 13.9% w/w, down -4.3% m/m, and up 54.4% y/y.

Reefer Spot Rates: Rates up 1.6% w/w, down -2.5% m/m, and up 16.3% y/y.

Fuel prices have risen by 0.7% w//w.

(Source: DAT Trendlines)

spot rates-2-9

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Ways to Save on Increasing Costs

You may be able to save costs by consolidating shipments, tendering consistent freight and utilizing distribution centers to shorten some lengths of haul. Read our blog for other cost saving measures.

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