Finding cost-effective methods to transport your raw materials and finished goods is a timeless need. AMEND is here to provide up-to-date information on transportation market activity and advise on how your company can navigate market changes and continually minimize freight spend.
Interested in examining your supply chain further? We analyze every component of your supply chain to identify and implement cost-saving initiatives. Reach out to Eric to discuss your current state and needs.
June’s transportation activity provided another sequential improvement from May, but it is clear that the economy’s road to recovery is only beginning. Further building out of April’s market bottom, June’s shipment volumes increased 3.5% from May’s results. These figures, however, are 17.8% below June 2019’s levels and remain below pre-pandemic levels. Weak consumer confidence persisted as June’s sentiment showed below any reading from the past five years. It is unlikely to see a sharp rebound in near-term volumes without further government funding assisting businesses and consumers.
Truckload rates decreased minimally (0.7%) from May 2020 and have hovered around the same levels since January 2020. This is less drastic than comparing to year-ago levels as rates have eroded 5.9% from June 2019. This general price stability in 2020 comes as a bit of a surprise as carriers have cut available capacity in the industry – some believe that this stability may stem from shippers holding firm in contract negotiations. This may change soon as carriers continue to realize steep declines in performance, and this pricing change will be worth monitoring as major carriers respond to their recent earnings reports.
Shippers also continue to benefit from significantly reduced fuel prices. January to April highlighted a steady decline in diesel prices, and prices have bounced back minimally from the April bottom. These prices remain 20% below year-ago levels and are aiding shippers against potential rate increases. When compared to June 2019 spot rates, dry van rates are up 9.8% and reefer rates are up 4.6%, but flatbed rates are still down 4.4%. Should diesel prices rise, spot market rates could inflate quickly and lead to lagging contract rate increases as well.
Ocean freight remained soft through June, yet ocean rates continued their pricing increase trend against May levels as carriers continued to rationalize away capacity. This practice will continue to inflate prices so long as carriers cut available capacity – a factor worth monitoring if for those sourcing across the seas. Air freight has also struggled with capacity constraints as commercial capacity will potentially remain out of the market until late-2021.
In summary, shipment volumes continued their upward recovery trend, but attaining 2019 economic and transportation activity levels is still a significant improvement away.
*Data Source: June 2020 Cass Transportation Index Report
Want to receive AMEND’s monthly Transportation Updates? Subscribe below.
[cta id=”6723″ vid=”0″]