This month industry analysts are reporting significant upticks in spot rates and demand due to restocking demand from grocery and home good retailers. Spot market load volumes and rates for van and reefer equipment saw mostly significant gains in March due to the ongoing corona-virus pandemic, according to data issued by Portland, Oregon-based freight marketplace platform and information provider DAT.
For the week of March 16-March 22, DAT reported the following annual differences:
- spot load posts are up 4.6%;
- spot truck posts are up 2.4%;
- van load-to-truck ratio is up 11.4%;
- van spot rates are up 5.6%;
- flatbed load-to-truck ratio is down 16.2%;
- flatbed spot rates are up 0.8%;
- refrigerated (reefer) load-to-truck ratio is up 26.1%; and
- reefer spot rates are up 7.5%
Other contributing factors cited included declining diesel prices and a 3-to-1 load-to-truck ratio in March.
The next couple of weeks will be important to watch, but what we are seeing is that demand will mainly be driven by load volume, and the past week was a near vertical spike in load volume for posted loads in the DAT network. The general consensus is that capacity has not left the market but is being sucked up by large contract truckload shippers and are not using the spot market. The coming weeks will be interesting to watch as spring shipping season and demand for reefers with produce season, so the market could see a compounding effect here in the next couple weeks for load-to-truck ratios.
There is also, typically, a midterm horizon in the early summer, which is in the middle of produce season. Things like Xboxes are going to start coming across the ocean mid-summer depending upon China’s production levels at the time. There are several traditional transportation fence posts that will be worth watching with a focus on if corona-virus is going to bleed into Peak Season and Black Friday later this year.
Many shippers, carriers, and brokers expect the truckload market to shift in 2020, with capacity tightening and rates rebounding after plummeting last year from 2018’s unprecedented peaks. The questions have been how swiftly will this shift take place, when will it begin, and how high will prices rebound? The impact of the corona-virus on international and domestic supply chains brings a sharp focus to those questions.
Uncertainty Hampers Logistics Planning
Uncertainty about the duration of the virus will create planning challenges ahead. Analysts don’t know how much excess volume is going to hit the market and what affect it will have on market demand. As west coast ports return to normal operations outbound demand may be significant in the coming months. Such increases in freight volumes would tighten capacity across transportation modes and push up pricing, at least until the backlog of freight makes its way through supply chain networks. At this point this is all conjecture based upon industry analyst’s observation. The fact is its just too early to tell. There have been encouraging signs of rebound in both China and Italy. Hope for the best but prepare otherwise.
Land Link Traffic Services is Here to Help
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