This is a weekly series that brings the insights we use to get your shipments from A to B from our carrier sales floor to your home office.
This week Loadsmart’s Carrier Sales, Jimmy Fahey, breaks down what happened last week and what to expect this week in the freight market in less than 60 seconds.
What We Saw Last Week
- New jobless claims fell close to their lowest level last week since the pandemic began. First time flings in the week ended Oct. 17 totaled 787,000, above pre-pandemic norms but below the almost 7 million claims during a week in March when the virus prompted widespread closures.
- White House officials and House Speaker Nancy Pelosi are closing in on a nearly $2 trillion dollar deal to provide another round of stimulus checks, reinstate extra weekly unemployment benefits and extend aid for small businesses, airlines, and state and local governments. This all comes as COVID-19 cases rise to their highest levels since the middle of summer and cooler weather will hamper the ability for outdoor activities. However, if the White House and House Speaker Pelosi reach an agreement, a vote would most likely have to wait until after the election
- Union Pacific doubled it’s surcharge on small shippers sending excess contract cargo out of the Seattle market from $500 to $1000 per container starting Oct. 25th. The upcharge comes three months after it began charging fees in the LA and Stockton-Oakland markets, but the surcharge has done much to lower demand as UP’s 3rd quarter volumes jumped 24% from Q2, the largest quarter over quarter increase in the company’s history
- As consumer spending shifts from services to goods and imports, retailers are stocking up earlier than usual to make sure shelves are stocked as consumers will shop earlier than previous years to avoid crowds. Ports across the country are reported record volumes to end Sept. and imports increased 15% YoY. The influx of containers at US ports has increased container availability at the ports, but supply is plunging in Asia and container prices are soaring in Asia.
- Though the industrial sector remains somewhat depressed, Broughton Capital’s Flatbed Barometer set a 2 year record for the month of September with a measurement of 65.5, which eclipsed all other Septembers since 2010, with the exception of 2018, which was only a point higher. Load density is climbing, capacity remains tight and lanes remain unbalanced. Flatbed carriers should expect operating margin improvement, as they capture strong increases in pricing and achieve strong levels of utilization.
- A cold front came thru the PNW on Friday and dumped 12 inches of snowfall in parts of WA, OR, ID, and MT with gusts between 35-50mph. Several inches of snow also blanketed parts of the Dakotas, MN, NE, IA and WI. Though the effected markets are typically backhaul markets, we can expect an imbalance coming into next week, as drivers were heading into those markets may opt to decline tenders and reposition into other markets to avoid being stuck in the storms path.
What To Expect This Week
- Volumes and rejections have moderated, while price remains still high. OTRI is sitting at 25.07%, with VOTRI at 24.59% and ROTRI at 44.25%. Spot market rates are still sitting at a national avg. of $2.43/mi, while contract is at 2.28/mi. Though Oct. has historically been a slower month in the industry, anticipate a tight week as we approach EOM.
- With speculation of increased panic buying and surges in food and grocery purchases, anticipate reefer rejections to continue to climb as we head into the winter months and PFF.
- 2020 is shaping up to be a record breaking season for hurricanes and storms. We are tracking a low-pressure system in the Caribbean looming closer to Florida and having a 60% of developing into a hurricane. If it develops, it will be named Zeta, which is the 27th named storm of the year, tying a record set in 2005. We are also tracking the effects of Hurricane Epsilon, a Cat. 1 hurricane that battered the US East Coast over the weekend bringing high winds of 85mph and large swells.
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