Monthly Transportation Update: July 2021
We’ve found SONAR’s Monthly Market Update to be incredibly useful at understanding and predicting logistics and transportation trends and freight pricing. Below are a few key parts of the most recent report.
Overall Freight Market Update
“The national freight market remained tight across all major modes. Spot rates eased slightly to start the month, then rose once again from maritime to truckload. Some easing has been felt in the form of increasing compliance thanks in large part to increasing contract rates, which have helped reduce tender rejection rates slightly. However, the seasonal end-of-month/pre-holiday push re-tightened the market on par with seasonal expectations for domestic transportation providers. Demand remained as high as ever with no signs of slowing down Some seasonality has returned to the market as demand and rejection rates increased toward the end of June.
Trucking Market Update
“National rejection rates have been on a slow-declining trend since the end of March. Memorial Day interrupted the slide only briefly before rates fell to their lowest levels since mid-February – around 22.5% in the second week of June. By the third week, national rejection rates were on their fastest rate of increase since Easter. Rejection rates peaked just above 25.2% on June 30 before falling slightly.
The end of the second quarter looks more like a bump in the road going downhill than a seasonal mountain peak. The dynamics are vastly different from the pre-COVID years as well, including the wild ride that was the 2018 freight market. All signs point to a cycle with a long tail unless there is further disruption like the winter weather events of mid-February, which may be more likely considering market sensitivity. By this we mean consumers’ and subsequently shippers’ increased likelihood to panic buy.
Differences by Truck Type
“From a modal standpoint, van capacity changed very little while reefer rejection rates continued to fall into correction. Flatbed moderated after hitting all-time highs in late May/early June. Reefer rejection rates fell to their lowest point in nine months at 34% before bouncing closer to 40% toward the end of the month. Reefer rejections never rose back above any May values when they averaged above 40%. Flatbed rejection rates eclipsed 30% for the first time and moderated to around 26% through the back half of the month.
“Contracted rates continued to adjust higher for dry van truckload prices in June. They averaged nearly 20% higher than the previous year for the same month according to initial reports. LTL rates did not increase as much but have already moved significantly in response to the past year’s tighter than average market.
“Orders for new Class 8 vehicles fell once again in May, indicating the backlogs may be curtailing fleet expansion efforts (along with difficulties in finding new drivers). Employment levels for trucking – including back-office – increased sharply, but are still well below where they were in 2019, with demand averaging around 30% higher in June. The orders from last fall are still a few months away from traditional fulfillment cycle completion, but many OEMs are reporting significant delays up to 16 months – meaning many of these orders may not be completed until 2022.”
“From a regional capacity perspective, the southern tier had the most difficulty, with both Atlanta and Dallas hitting all-time highs at the end of the month. The West Coast continued to be erratic as rejection rates increased back over 24% out of Ontario after appearing to stabilize in May. Other major regional markets like Chicago and Harrisburg had month-end increases, but their overall trend was lower than in previous months.”
How Does This Affect You?
If you need help understanding how this information has and will affect your business and how to take advantage of it, talk to a LiVe Logistics freight expert. We can help you plan for the rest of the year so you can avoid late deliveries and paying top dollar for freight.
Contact us to for a mid-year logistics review today.
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