Truckload Market Update: March 31, 2020

March 31, 2020 Andrew Herpich

Andrew Herpich, SVP Carrier Sales and OperationsIt's been a turbulent past week for shippers and carriers as we all settle into another week of widespread sheltering-in-place.

Here's an overview of the top things shippers and carriers should be aware of. 

7 Things to Know for the Week of March 30, 2020

  1. Many businesses are rapidly adjusting their business models
  2. The spot market is more volatile than usual
  3. Overall volume seems to be subsiding
  4. The U.S. consumer is stocking up
  5. The DOT is making exceptions for drivers
  6. Congress passed a stimulus bill
  7. Produce season is still coming

Continue reading for more details.


 

Desperate Times Call for Desperate Measures

Throughout the past week, demand continues to shift from industry vertical to industry vertical.

As the demand for medical supplies (personal protection equipment, disinfectants, ventilators, etc.) skyrockets, manufacturers in industries that have seen demand fall off are re-tooling their production lines. 

For instance:

  • Large auto manufacturers are now producing air ventilation systems.
  • Distilleries are producing hand sanitizer
  • Companies with private fleets and slowing customer demand are focused on loading their capacity with other shippers' freight

Companies are shifting their primary core focus over-night. This creates new supply lines, for both raw material inputs and finished product outputs.

Companies are shifting their primary core focus over-night. 

If you have excess fleet capacity, consider using to haul surge freight. If you have surge freight and are in need of a quickly deployed pop-up fleet, there are options available.

Everyone is pulling together to ensure freight keeps moving.

 

Have excess private or dedicated fleet capacity? Need a pop-up fleet to handle surge shipping?

Coyote moves hundreds of private fleet loads every day. Whether you're on the supply or demand side, we can help. 

 

Spot Market Whiplash

The historically volatile market is currently even more chaotic, making it extremely difficult for shippers and carriers alike to set a near-term strategy.

Generally, when a market is tight, it's tight, and when it's loose, it's loose, allowing business to adapt accordingly.

The last week, however, has seen a combination of both simultaneously, heavily dependent on industry, region, lane and time of day.

Each day the truckload market is tossing and turning.

Each day the truckload market is tossing and turning as the economy recalibrates. The same-day market is the most volatile, with real-time rates ebbing and flowing by the hour. 

Every business is feeling the effects differently: 

3 General Shipper Situations: 

  • Huge demand, shipping surges
  • Huge demand, waiting on raw materials, shipping delays
  • No demand, doors are closed

2 General Carrier Situations:

  • Highly leveraged to the spot market, able to quickly deploy capacity to capitalize
  • Highly leveraged to committed, customer freight that is no longer shipping and scrambling to secure volume to keep trucks moving

For the next week or so especially, the less expectations you have concerning rates and capacity, whether positive or negative, whether shipper or carrier, the better. 

To keep up on market trends and shifts, join us on Thursday, April 16th for a free webinar featuring a panel of experts including Chris Pickett (Coyote Chief Strategy Officer), Nick Shroeger (Coyote Chief Network Strategy Officer) and Geoff Freeman (Consumer Brands Association President & CEO).

 

Truckload Volume Begins to Subside

After an initial surge throughout early March, we have seen our overall volume begin to subside week-over-week. 

Typically, this week sees a spike in demand as shippers move to get product off the docks before the end-of-month/end-of-quarter. We anticipate a relatively muted bump this time around. 

We have seen overall volume begin to subside week-over-week. 

Why? The nationwide shelter-in-place has moved from April 6th, to the 13th, and now to the 30th.

With consumers spending more time at home for longer, many shippers are bumping out their production forecasts.

Even though manufacturing facilities in China are coming back on-line, and it takes 2-3 weeks for shipments to arrive by cargo ship, the extended shelter-in-place will likely further delay orders for imports. 

According to Luth Research, only 10% of their respondents think the coronavirus outbreak will start declining in the next 30 days.

  • The most (39%) think it will be in the next 1 to 3 months
  • Followed by 36% thinking 3 to 6 months

We anticipate this trend will continue for the next few weeks as things we begin to settle into a new normal (for now). 

 

The American Consumer is Stocking Up

Over the past few weeks, there has been a huge surge for demand as consumers flocked to grocers and retailers, stocking up on essential food items and consumer packaged goods. 

According to the Consumer Brands Association, when asked if they have purchased supplies to prepare for the coronavirus, the amount of respondents who replied "Yes" has risen 47% since the beginning of the month. 

 

Graph showing an increase in the preparedness of the American Consumer

 

As the cache of durable goods in the average consumer's house grows, supply will start to catch up with demand for durable goods and shelf-stable products (toilet paper, disinfectant spray, canned goods, etc.). 

 

The DOT Makes Some Exceptions

In accordance with the Federal declaration of a State of Emergency, both U.S. and State-level Departments of Transportation have made a few exceptions to keep critical supply lines moving. 
 
Here's a quick overview:
  • U.S. DOT
    The Federal Motor Carrier Safety Alliance (FMCSA, part of the U.S. Department of Transportation) has granted an extension to all Commercial Driver’s Licenses (CDLs), Commercial Learners Permits (CLPs) and non-CDL licenses for operators of commercial vehicles that would have previously expired between March 1st and June 30th, 2020. 
     
  • State DOTs
    State Departments of Transportation are continuing to evaluate, and grant temporary relief, to a variety of fleet regulatory measures, including Hours of Service, weight restrictions, etc.
     
  • State Police
    State Police Agencies, according to the Commercial Vehicle Safety Alliance (national association of state commercial vehicle enforcement agencies) will primarily focus on "reactionary efforts" (i.e., blatant safety infractions) as opposed to more proactive enforcement. 
     
  • DOT Week
    The annual CSVA International Roadcheck (aka DOT Week, DOT Blitz), originally scheduled for May 5-7 has been postponed, pending rescheduling for later in 2020. 

All this adds up to the government (and the rest of the country) noticing how important truck drivers are to critical supply infrastructure. 

 

The Stimulus Bill

Congress passed a record-breaking, $2.2 trillion stimulus bill to protect Americans. The bill includes individual stimulus checks, small business aid and other policy changes to support us through the coronavirus outbreak and recovery.

Our friends at Consumer Brands also helped advocate for three components of the recently passed bill that will help enable CPG companies to produce essential products: 

  1. Allowing states to issue permits to lift truck weight requirements in order to increase the flow of essential goods through the rest of the fiscal year.
  2. Providing funds and resources to the U.S. Environmental Protection Agency for expedited registration of disinfecting products essential to stopping the spread of COVID-19.
  3. A National Academies of Sciences study on the security of the U.S. medical supply chain, including PPE masks, to mitigate supply chain issues in the future. 

In the days ahead, look for more in-depth information from Coyote about the stimulus package and how you can leverage it to support your business.

 

Produce Season Is Still Coming

With all the coronavirus disruption going on, it's easy to forget about Spring's (traditionally) biggest disruption: produce season. 

It was a mild winter throughout the southern U.S., and we should start to see more freight moving out of Florida in the next two weeks. 

Refrigerated carriers running from Florida up the East Coast is typically the first market to move. 

It's easy to forget about Spring's (traditionally) biggest disruption: produce season.

Laredo is another a leading hot spot, but demand is comparatively less, as less imports are coming in from Mexico due to weakening consumer demand. 

Overall, this will be an interesting season. While demand for produce in grocery stores remains very strong, the demand in restaurants (many of which have closed their doors, though some kitchens remain open) has declined.  

Many produce shippers are readjusting on the fly, trying to find new end markets. 

 

Need Help with Anything?

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