While many states recently extended their shelter-in-place orders to the end of May, others are planning to open back up (with some restrictions) at the end of April.
Though some businesses in some regions will resume operations, it will not likely have a substantial impact on the market — at least not immediately.
Though in many ways this week has been more of the same, there are some signs that we have a reached a turning point. Here are a few key things to keep in mind this week.
6 Things for Logistics Professionals to Know this Week:
- We may have reached a turning point.
- Small business can access financial aid with a refunding of the PPP.
- Produce season is gaining momentum.
- Early summer holidays are upon us.
- The country remains divided about when to open up.
- Friendly Reminder: International Roadcheck Week is not happening this May.
Let's dive deeper into each topic.
1. Have We Reached the Turning Point?
There is no question — overall truckload volume is much lower than average for this point in the year. Spot market truckload rates have suffered as a result, declining for each of the last 5 weeks. We've seen some carriers park capacity during this trying time.
That said, we are likely nearing a downward inflection point — we should start to see both volume and spot rate declines flatten (and hopefully start trending upwards).
There are a few signs that we may be at a turning point. Though we don't expect a dramatic recovery to kick in for several months, we may have seen the worst of the shelter-in-place demand slump.
After 7 weeks of consecutive decline, our truckload volumes increased 6% week-over-week.
UPS Small Business Survey
For the first time since their survey began 4 weeks ago, the number of businesses negatively impacted by the pandemic decreased, dropping to 81% after peaking at 83% last week.
Furthermore, the number of respondents who expect their Q2 revenues to decrease was slightly lower week-over-week.
Consumer Brands Association Survey
While none of these are conclusive data points, and the current situation is still rough and the road ahead uncertain, these could be some of the first hopeful signals that we are beginning the climb upwards.
2. Government Stimulus Package: Small Business Aid
We covered it last week: a $484B relief package went into effect, the bulk of which replenished the Paycheck Protection Program (PPP), giving more support to small businesses.
Loans are offered on a first come, first served basis.
Unfortunately, there were some issues with the Small Business Association's portal this past Monday, but it's not too late.
If you would like to read more to find out if you're eligible and how to apply, we compiled a basic Q&A that might be helpful.
You can also visit the the Small Business Association's site for more information.
3. Produce Season Is Gaining Momentum
Right now, the busiest shipping states are the usual suspects for this time of the year:
In the southeast, produce is heaviest out of Florida right now, and will be through May, before the focal point moves north to Georgia and the Carolinas in June and July.
We have also seen a spike in refrigerated spot freight. Though there is available capacity, it is a tighter market relative to the current state of dry van.
4. Early Summer Holidays: Overview
There are a few early summer holidays right around the corner, and though we will not experience the same shipping surges as usual, there may be some volatility for spot market rates and capacity.
Cinco de Mayo
- Tuesday, May 5
What to Expect:
- We typically see surges from some of our beer shippers, but with widespread sheltering-in-place (and capacity limitations for any businesses that are open) this will not likely create any disruption.
- Sunday, May 10
What to Expect:
- A lot of flowers will be shipping this week and through the weekend, as grocery stores and direct shippers prepare for the holiday.
- Florida is one of the larger producers of flowers, so expect more volatility there.
- It is also end-of-month this week, which usually means a slight spike in volume as shippers try to move product off their docks.
- Monday, May 25
What to Expect:
- Memorial Day will be the next major driver of consumer demand. Though it will not likely drive the same levels of demand as usual, if several states are opened up by then, we could see a spike as everyone gets excited to fire up the grill.
- Any related demand surge would start around mid-May.
5. The Country Remains Divided on When to Open Up
The country remains divided over when and how to ease COVID-19 restrictions. Several states are allowing many "non-essential" businesses to open as soon as April 30, while others extended lockdowns until the end of May.
This is not only true for states, but consumers, with 42% in favor of staying closed and 41% in favor of opening back up.
This lack of cohesion will create uneven supply and demand patterns, potentially creating more short-term volatility as regions come back online at different times.
6. Reminder: DOT Week Is Not Happening
Originally, the Commercial Vehicle Safety Alliance (CVSA) International Roadcheck (aka DOT week or DOT Blitz), was scheduled for May 5-7. This generally causes a nationwide capacity crunch, but not in 2020.
Due to COVID-19, it has been indefinitely postponed.
There are two more CVSA events scheduled for later this summer that, as of now, are still a go, but we do not expect either to have a significant impact on the market.
- Operation Safe Driver Week is still scheduled for July 12-18
- Brake Safety Week is still set for Aug. 23-29.