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Weekly Market Brief

July 28, 2020

This week's freight market is reaffirming what we already know from the last several months--this is no typical year in the supply chain. Historically speaking, mid-July is the month we should start seeing volumes drop with pricing following  like a faithful canine. But with this year's upset due to the pandemic, volumes are still holding strong in many areas, and what comes next is anybody's guess. 

 

California has remained a strong market over the last month, and this week we are seeing spikes in both the Ontario and Sacramento where there is extremely tight truck capacity. Other markets showing capacity issues this week are Harrisburg and Allentown, Pennsylvania. Both of these markets are in the top five highest increases in the country, week-over-week, for tender rejection rates. Also of note is the Denver market, which is exhibiting some of the most rapidly softening conditions.

 

Weekly market updates help you identify areas where freight capacity is tight as well as areas that are loose and easier to cover. This helps you better understand the market and provides a basis for your pricing.

Spot Market Rates & Volume  

Below is a graph showing a weekly view of the month-to-date national average spot rates from DAT. 

Spot load posts (July 20-26) are down 3% from last week, but are up 82% when comparing the month of June from May. 

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Date Range: July 20-26 versus July 13-19

Dry Van: Load-to-Truck ratio was down 3.8% versus 4.9% down from the week prior

Dry Van Spot Rates: surprisingly, rates are up 2.5% versus a 4% increase last week from the prior week

Reefer: Load-to-Truck ratio is down 7.9% versus 1.3% down from the prior week

Reefer Spot Rates: Rates are up by 0.6% this week versus up by 2.3% from the prior week

Fuel prices have dropped 0.2% from last week. 

spot rates7-27

Who's Got the Power?

The pricing power index is a weekly gauge of 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. The image below shows the most recent pricing power gauge from July 24, 2020 and as you can see, it has pushed even further  toward the carrier side compared to the week before.  

dhl-pricing-7-24

Outbound Tender Volume & Rejection Rates 

The graphs below shows the last six months of outbound tender volume and the last year of outbound rejection rates for the United States. The data is compiled from the heaviest shippers in the contract market.The blue line indicates 2020, the green 2019, and the orange 2018. There continues to be more freight than is typical this time of year with much of the contract freight spilling into the spot markets. Outbound tender rejection are slightly higher at 17.87 versus last week at 16.56.

(Graphs below courtesy of Sonar/Freightwaves)

OTVI YTD July 28 2020

OTRI YTD July 28 2020

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Capacity This Week

Dark red areas (hot spots!) on the map show where capacity is tightening. Rates in these areas will be higher than in blue areas of the map where capacity is loose. As an example, reefer freight is experiencing heavy volume along the North Carolina, Virginia coastal areas (and the map doesn't show it but we are experiencing heavier volume on Maryland's Eastern Shore too). Also areas of Utah and western Colorado are showing tight capacity. The dry van market is seeing capacity restraints in  parts of Missouri and southern Illinois as well as lower Arkansas, putting upward pressure on rates in those areas.

Note: Top Map is reefer capacity, bottom map is dry van. (Maps courtesy of DAT.)

Capacity Map Reefer 7 28

 

Capacity Map Dry van 7 28

Produce Market Updates

It is an unpredictable market with new COVID-19 spikes in prime produce shipping states, but this is what we are seeing this week. 

East Coast: North Carolina, Virginia, and Maryland's Eastern Shore are in full swing right now, showing heavy volumes.

Northeast: Rates are fluctuating with capacity up and down daily. 

Midwest: Melons coming out of Indiana should be starting up soon.

California: Rates are still spiking, much higher than usual volume this time of year.

Texas: Plenty of freight still coming out of Texas with moderate rates in some areas.

 

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