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 Capacity Solutions Manager, 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
- DOE/EIA weekly retail diesel prices rose for the 14th consecutive week. Diesel prices in all markets continue to rise and show no signs of slowing, particularly with the cold weather gripping much of the US. Diesel prices have returned to levels last seen in early March 2020, before the full impact of COVID-19. Demand has remained robust through freight transportation and is ahead of year-ago levels; though domestic gasoline is down 10% and jet fuel down 34%.
- Federal regulators issued a fourth extension to the HOS waiver that was set to expire on Feb 28th. The exemption to the HOS rules for drivers was first issued on March 12, 2020 in response to the pandemic. The recent extension will go through May 31st and included a new restriction to those operating a vehicle in a condition likely to cause an accident or breakdown and operating a vehicle declared and marked out of service until all repairs have been completed.
- New weekly unemployment claims pulled back slightly but held at elevated levels last week, and the prior week’s new claims were upwardly revised as the pandemic exerted more pressure on the labor market. Initial claims ended the week of Feb. 6th at 793,000 vs. 760,000 as expected and a revised 812,000 during the prior week. This brought new claims for the week ended Feb. 6 to the lowest level in 5 weeks and, despite last week’s upward revision, the four-week moving average for new claims fell by 33,500 to 823,000. Based on the latest data however, 20.4 million Americans are still claiming benefits of some form, marking an increase of more than 2.5 million from a prior week.
What To Expect This Week
- Weather will continue to be a major fact this week, and possibly weeks to come. Two-thirds of the country is under a winter weather alert — frigid temps, snow, and ice storms stretching coast to coast. Snow and ice accumulations will cover more than half the nation and hit unprepared areas very hard. Drivers will opt to sit this week out, reducing capacity in a tight market; while transit delays will disrupt capacity and service performance. Facilities in the unprepared areas will face closures and possible power outages.
- Reefer demand may spike this week as well. Last week ROTRI oscillated between 40.50 and 41.50%, but volumes have picked up to 2063.05 index points over the past week. Expect upward pressure on spot rates.
- Freight volumes have been trending sideways since the start of January, bouncing between 13,600 and 14,200. This is typical for this time of year, but it is at a high level. If the pattern continues, volumes could pick up speed in the latter half of the month. OTRI has been trending sideways as well, moving less than 2% points over the past month; however, imbalances and weather pushed rejections from 21.2% to almost 23% to end last week. Anticipate this trend to continue as this week’s forecast will be more disruptive than last weeks and could coincide with a seasonal uptick.
- This week be on the lookout for January retails sales. Industrial production and housing start updates to be released.
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