The Top 6 Stories in Freight
Here’s what’s happening this week:
- Wild rate swings and record-setting rates have led to shipper bid fatigue
- North America Class 8 truck orders up 146% year over year.
- Data shows contract rates up 12% year over year.
- Dry van volume sees surprising mid-winter surge with posts up 17%
- Yard management proves to be a costly blindspot for shippers
- West coast port congestion may see relief… by late spring
The hottest stories in freight can be found here, in the Weekly Freight Report:
1. Trying to time the market exhausts shippers
Turns out the wild rate swings of 2020 and record-setting peak rates have led to shipper bid fatigue… As we enter a new market dynamic for 2021, many are asking how best to handle their RFPs… should they delay bids while the market fleshes itself out? Move those annual bids to six month or three month contracts? What’s the play? While there’s no question that mini bids are the short term best solution, trying to ‘time the market’ long term will be an exhausting effort. And the longer-term play, beyond bids, is performance-based carrier selection and route optimization. Get the details here.
2. Class 8 orders clear 40,000 in January
STAT OF THE WEEK: North America Class 8 truck orders were up 146% year over year in January. That’s right, more than 42,000 trucks were ordered last month. Of course, there’s a massive need for more capacity right now and that’s largely what’s driving the purchases. While the calvary is now on the horizon, the big challenge will be getting drivers in the seats of these new trucks. The driver shortage is real and while the truck pool may increase, we need the driver pool to increase proportionally to truly solve the capacity imbalance. More trucks is definitely a step in the right direction. Get the details here.
3. Trucking contract rates up 12% year over year
Where will contract rates settle in 2021? Most market analysts have predicted that contract rates will increase in the 6% – 10% range. Now we have the first data point that shows contract rates increased 12% in the fourth quarter of 2020. The latest data from FreightWaves shows the Van Contract Base Rate per Mile, which covers long-term pricing agreements, was indeed 12% higher on average through peak season. Seems this data lends credibility to the expectations for 2021 as shippers aren’t out of the woods yet relative to the truck supply and volume. Get the details here.
4. Dry van sees a mid-winter surge.
Dry van load posts increased 17% week over week. While volume continues to increase across every market, capacity has started to loosen a bit as the load to truck ratio is now at 4.29… But shippers shouldn’t get too excited. Van rates are still unseasonably high and at the highest Feb levels in over 5 years. Get the details here.
5. Yard management is a costly blindspot for shippers
Wasted time and additional labor lead directly to increased costs… and that’s what’s happening in the shipping yards across North America. Shippers desperately need real time visibility and dynamic automation in yard management. According to a recent FourKites study, 3 in 4 yards are overburdened by manual processes that negatively impact shipping KPIs. And while 92% of respondents believe a yard management system would add value… only 25% have one. Read up on what’s driving this gap and what shippers are doing to improve it here.
6. LA-LB port congestion will continue into late spring
Could it be true… a spring clearing for the west coast ports? Near-record volumes continue to bury the ports with inbound containers. And despite improvements, terminal operators don’t expect ports to be caught up from vessel backlogs until June. Operators say dissipation relies on two factors… (1) a vaccine for workers and (2) a modest drop in volume during the upcoming Lunar New Year holidays. Get caught up on this developing story here.
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