Shipping Trends for June 2023: Latest Freight Market Cheat Sheet

Welcome to the Freight Market Cheat Sheet.

In this short guide, supply chain professionals (like you) can get a quick update on what's happening in North American freight markets this month. 

Read on to get insights driven by market experts and proprietary network data.

(If you'd prefer, you can also download this as a PDF.)

News & Trends | Full Truckload | Less Than Truckload (LTL)
Intermodal | Cross-Border Canada | Cross-Border Mexico | Coyote News
 

Freight Market Trends: 4 Things to Watch This Month

For the past several months, demand for freight shipping has been hovering around an all-time low.

We've made it through Memorial Day, the unofficial start of summer, and now seasonal shipping is in full swing — are we finally seeing the turn of the tide? 

Let's recap a few trends to see what the next month has to hold. 
 

DOT Week Created a Spark in the Market.

Throughout Q2, we've been looking to the DOT blitz as a litmus test for where we are in the market cycle — our theory being that a muted response means we have some digging yet to do, but a spike could represent an inflection point. 

DOT week came and went, and for the first time in well over year, we actually saw some signs of life in the truckload spot market.

There was noticeable capacity dislocation across the board, particularly from seasonal produce markets like CA, GA and FL.

When put in the context of historical DOT week spot market responses, this year was in-line with prior years. 

So Did Memorial Day.

The week leading in to Memorial Day saw even more capacity dislocation, and a corresponding spike in spot rates.

It was more of the same, with seasonal markets being disproportionately impacted.

The one-two punch of DOT week and Memorial Day created an overall two-week rate spike of 10.4%.

The Contract-Spot Rate Divide Continues to Shrink.

Over the past month, we saw the spread between contract rates and the spot market shrink by 42% (this was all driven by spot rate growth, as contract rates remained flat).

While we expect contract rates to continue their gradual path downward before ultimately finding a bottom in a few quarters, the recent strength in spot rates could represent a stronger market over the summer before we ramp up into peak season.

Up Next: 4th of July. 

Now that the two early summer shipping events are done, we may see some minor sequential declines in the coming weeks.

It remains to be seen if the market can sustain this pressure, or if it’s merely just seasonality sending temporary shockwaves through the market. 

But the stage is set for the upcoming 4th of July holiday. Furthermore, the 4th falls on a Tuesday, which generally adds to disruption, vs. an end-of-week date.

Supply Chain Fun Fact of the Month

According to research on supply chain outsourcing, shippers are most likely to invest in a private fleet for guaranteed service, closely followed by reduced cost.

This is in keeping with other research on KPIs, which shows that cost and service are often the two most important things, but in a head-to-head, service wins.

Full Truckload Trends: June 2023

After weeks of steady decline, we're seeing a reverse of course, as the one-two punch of DOT week and Memorial day provided a spark to spot markets. 

Comparing May to April, we saw a modest increase across all equipment types, with each gaining momentum in the back half of the month. 

Though rates are still significantly down compared to last year, they are much less so than last month's update.
 

Note on the data: all truckload rate figures are derived from Coyote's proprietary transactional data. With over 10,000 daily shipments, it is one of the largest centralized freight marketplaces in North America. 
 

Want the updated truckload market forecast?

Read the latest Coyote Curve^® index, or download the slides for your next presentation.

LTL Trends: June 2023

After a down period throughout Q1, demand for LTL is gradually starting to pick up.

There is still ample capacity in the carrier community, and a general hunger for adding new business. 

However, most carriers are maintaining pricing discipline, and specifically targeting customers that operate well within their networks. We're not seeing carriers offering discounts on high-touch freight or anything that adds significant time to operations. 

That said, it is an excellent time to work with your LTL providers to potentially revisit RFPs, or at least have them review data for a fit. You may find some carriers more willing to collaborate in ways that could yield savings over an old agreement.  

 

Intermodal Trends: June 2023

Domestic intermodal volume stayed largely flat, and international intermodal volumes even rebounded a bit last month. While the Y/Y volume levels remain significantly depressed, the deterioration has stopped and the market is stabilizing.

Intermodal capacity remains plentiful in most regions throughout North America.

Based on the Surface Transportation Board statistics, the overall intermodal network is stable, with service running at long-term average levels (or better), and no railroads are showing significant service issues.

Falcon Premium Service

The newly-announced Falcon Premium intermodal joint venture between the Union Pacific, Canadian National, and GrupoMexico railroads went live on May 15th.

The Falcon Premium partnership was created to be a direct competitor to the recently approved Canadian Pacific-Kansas City Southern merger (CPKC), and Falcon Premium allows for seamless intermodal shipping between Mexico, Canada, and the U.S.

Earlier in May, the partnering railroads announced that transit would be about a day quicker on some corridors than originally estimated.

An additional benefit of Falcon Premium is that any shipments between Canada and Mexico do not have to abide by U.S. DOT weight limits, because they will never touch the road in the U.S. thanks to a clever method of interchange in Chicago.

It is possible to ship 50,000+ lbs of product from Canada to Mexico, and vise versa. 

For their part, the CPKC launched an express U.S. to Mexico service earlier in May called the Midwest Mexico Express (MMX), which, among other things, can move a load from Chicago to San Luis Potosi (a 1,800+ mile journey) in just over four days.

With more and more companies nearshoring production to Mexico, the rail industry is going all-in on providing capacity to compete with traditional trucking.

Cross-Border Canada Freight Trends: June 2023

Rates have remained flat for over the past month, and are hovering around the lowest levels we've seen over the past two years.

For the time being, available capacity should continue to outweigh demand until at the back half of Q4 or early Q1, similar to the domestic U.S. market.

In the near future, there are two events that could contribute to some capacity dislocations:

• A dry spring is leading to wildfires across Canada, with Alberta and Nova Scotia especially impacted.
• Canada Day (July 1st) falls on a Saturday this year, and Canadians will have off Friday, June 30th to celebrate a long weekend.

Cross-Border Mexico Freight Trends: June 2023

Overall capacity and rates remain stable, though summer represents a spike in cross-border produce and beverage shipping.

In the coming weeks, many Mexican manufacturers will temporarily shut down their plants for annual inventory and maintenance, which does offer relief to capacity south of the border. 

As covered in the intermodal section, nearshoring will continue to be a trending topic with cross-border shipping.

Many overseas manufacturing companies are transitioning their facilities to Mexico due to the close vicinity, connectivity and capacity.

Coyote News

Here are a few things to stay up-to-date with Coyote Logistics. 

• For the 3rd year in a row, Coyote was in the top 3 of Transport Topics 3PL rankings.
• Coyote teamed up with Maersk and the UPS Foundation to coordinate disaster relief in Turkey. 
• Food Logistics named Coyote to its 2023 Top 3PL and Cold Storage Providers list. 

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