September 2020 Market Update

Posted by Brian Beasley on September 14, 2020 - 12:28 PM
September 2020 Market Update

High shipment volumes and tight truckload capacity bring challenges for shippers

Supply chains across the United States are experiencing the pain associated with skyrocketing shipment volumes and limited truckload capacity. Outbound tender volumes remain in uncharted territory at over 16,000 (Chart 1) — an increase of over 50% year-over-year (YOY). Increased demand and limited truckload capacity have resulted in a dramatic increase in truckload rates. According to DAT, for dry van freight, the average line haul rate for August 2020 was the highest on record.     

In the near term, there’s no indication this will subside. Retailers are moving quickly to replenish depleted inventories ahead of peak season. Evidence of this can be seen in both U.S. factory output and import activity.  

Factory output grew in August at the fastest rate in over two years. The Institute for Supply Chain Management’s Purchasing Manager Index (PMI) hit 56 in August; up 35% from April’s 10-year low of 41.5. Consumer sentiment is one of the best indicators for whether this trend will continue. The latest assessments from both the Conference Board and the University of Michigan showed faltering sentiment, with the University of Michigan’s survey showing the lowest value since 2004. One important item to note is that COVID-19 represents the first global pandemic of the modern era. Its impact on these qualitative surveys has yet to be seen. Expect the rest of this story to be told in the coming months as we learn more about the availability and timing of a vaccine.

Regarding imports, volumes have been climbing steadily since mid-July (Chart 2). This has only compounded the issue of limited capacity at our port cities. Nowhere is this more apparent than at the Port of Los Angeles where import volumes are currently at a three-year high (Chart 3) and outbound truckload tender rejections are over 27% (Chart 4). In a typical year, we would expect intermodal to provide a relief valve, unfortunately the railroads are also at maximum capacity. Recently, Union Pacific imposed surcharges as high as $5,000 per shipment on small shippers to try and lessen the demands on their network.   

ArcBest® is uniquely positioned to help both during normal times and when capacity tightens. As a logistics company with owned assets, we’re able to offer solutions through ABF Freight® and our Panther Premium Logistics® fleet in addition to our large network of capacity providers. Whether you want to build a lasting partnership with a leading logistics company, you’re struggling to find capacity, or you want to be proactive about peak season demand, we can help. With a combination of advanced supply chain technology and an experienced customer solutions team, ArcBest is equipped to find ways to solve even the toughest logistics problems. Learn more about our wide range of services.

Chart 1 

Outbound Tender Volume Index

Chart 2 

US Customs Maritime Import Shipments

Chart 3 

Weekly Maritime Import Shipments by Port

Chart 4 

Outbound Tender Reject Index

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