This week's update contains the best of the best (or is it worst of the worst?) comments and charts from 2020. It goes without saying that no one has ever seen the likes of 2020 before and that certainly is true of the freight markets!
Below are key captions/comments from the latter part of this year along with some of the most important indicators we track. We know this is a lot of info, but please take a look and save this one! The last few charts are large, long-term indexes that clearly point to rising rates.
What does 2021 have in store for us? Let's hope it's not 2020-1! But be prepared for a COVID-hangover in the new year with significantly rising rates. We certainly hope new capacity enters the TL market and that LTL carriers can move slowly back towards more "normal" operations and better performance, but we don't think this is going away as easy as it is to get a new calendar.
2021 themes should be - 1) Be prepared for higher rates, 2) Expect disruption and communicate that proactively to your customers, 3) Work hard to look inward on freight savings opportunities, and 4) Know that we are all in this together fighting the same battles on the same team! Hell, as of this writing, the postal service has had 2 of my daughter's Christmas gifts in their custody since Dec. 9!
Some have asked - "Thank you for all the information on issues and problems out there, but where are the solutions?". That's an excellent question and something we hope to address in early 2021 (many of the solutions are visible right now in Recon's TMS!).
Happy New Year all! Stay Safe!!!
"The result is seen in a meteoric rise in spot rates over the last 23 weeks. Spot prices paid to the carrier for dry van now exceed average contract prices, setting a new record high. The rapid, intense improvement in spot rates at this time of year runs counter to typical seasonality as Q3 pricing is often weak and rates seldom rebound before December. This year's trends are shaping up to be exceptional in almost every conceivable way. We believe the growth in demand and constraints on capacity are both sustainable in the short to intermediate-term and are poised to continue surprising to the upside."
The present constraints on drivers and industry supply are real, so even with better demand, fewer trucks are running and rates are rising significantly. How much capacity can be coaxed to enter next year in this tight supply/demand environment will play heavily into the ultimate growth in the shipper’s average freight bill.
Carrier "A" - We will be suspending all Guaranteed services for delivery dates starting 12/21/2020 – 1/4/2021
Carrier "B" - "No, we have no idea at this time when we will be able to move this freight - could be into the new year"
LTL WEEKLY CARRIER PERFORMANCE (2020):
DAT CAPACITY INDEX and its impact on LTL CARRIER PERFORMANCE:
DAT CAPACITY INDEX VS. TL SPOT RATES:
DAT Year Over Year Spot Rates:
CASS Freight Linehaul and Volume Indexes:
FRED - Fed Economic Research - LTL and TL Producer Price Indexes:
