Identifying freight market trends across all modes

Tony MulveyFreight Market Blog

Short-haul volume growth shines a light on current trucking trends

Understanding freight trends from the beginning of the supply chain all the way through to delivery is important for all parties involved. Current market conditions are among the most difficult that the industry has faced in recent years. The capacity constraints across all modes haven’t been alleviated even though attempts have been made. While capacity constraints remain rampant across the supply chain, demand hasn’t wavered due to strong consumer buying.

Traditional freight trends follow seasonal patterns; the summer and holiday season typically lead to strong growth in freight demand and tightening of capacity while the first and third quarters are traditionally the softest. 

Identifying trends in the maritime market is also important, because increased ocean freight impacts domestic transportation markets as freight arrives on shore. The current trends in maritime shipping data suggest increased shipment delays and further inflationary pressures on rates. The number of ships waiting at anchor in San Pedro Bay to unload at either the Port of Los Angeles or the Port of Long Beach continues to trend higher, while COVID-19 outbreaks at the Port of Ningbo, China, reduce capacity significantly.

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Chart: SONAR: Inbound Ocean Shipments Index – China to USA: The number of ocean shipments being booked from China to the U.S. has been trending higher since mid-June 2020, likely setting new all-time highs in the coming weeks. 

China, which is the largest trade partner with the U.S., represents more than 6 times the import volume, both containerized and non-containerized, than the second closest country, South Korea. U.S. consumers are still buying merchandise of all kinds amid rising inflation pressure. Therefore, the demand for products from China and other countries around the world continues. The upward trend of maritime shipments gives advanced warnings to shippers to act earlier than anticipated to secure capacity.

The intermodal market trends suggest that capacity constraints are leading to increased spot rates as railroads are protecting capacity for contracted freight. The service issues are causing intermodal volumes to fall, and not keep pace with truckload and import volumes. Between all of the service problems and capacity constraints, the intermodal spot rates have moved out of reach for a majority of shippers, especially on eastbound lanes out of Los Angeles.

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Chart: SONAR – Long-Haul Outbound Tender Volume Index {Green} and Outbound Loaded Domestic Container Volumes {White}: Long-haul truckload volumes outpace domestic intermodal volumes as service issues persist

Long-haul truckload volumes experienced significant growth over the past two years thanks to the increased demand for freight and railroad service issues. Savvy freight managers understand freight trends. Coupling the relationship between domestic intermodal container volumes and long-haul trucking volumes leads to  understanding when moves are better suited for the highway instead of the railroads and vice versa.

These trends in both the intermodal and maritime markets are going to impact trucking volumes, which have been moving upward during the standard pre-peak season lull. The truckload market is experiencing rising volume levels, which are due in part to the intermodal service issues and elevated import activity. As capacity constraints remain  prevalent, rates will continue to be driven higher.

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Chart: SONAR – Long-Haul Outbound Tender Volume Index {Orange} and Short-Haul Outbound Tender Volume Index {White}: As short-haul tender volumes trend higher, spot rates follow, setting new highs on nearly weekly basis

One of the major trucking trends over the past month is the rapid rise in short-haul truckload volumes (moves between 100 and 250 miles), compared to long-haul volumes that have been relatively stable. While tender rejection rates are typically one of the best indicators of spot rate direction, the upward trend in short-haul volume has caused spot rates to continue to set new all-time highs week after week.

All of these freight trends and more can be found through the use of FreightWaves’ SONAR and Supply Chain Intelligence platforms. To find current freight trends, check out the latest bi-weekly SONAR Highlight Reel here.

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