Industry Market Trends

GENERAL MARKET TRENDS

POTENTIAL MARKET DISRUPTORS

Current Market:

• Agricultural and Seasonal Trends: As we move into September, the Midwest is expected to continue experiencing high demand for freight services, driven by ongoing agricultural shipments. The harvest season for key crops like corn and soybeans will be in full swing, maintaining tight capacity and elevated spot rates for Reefer and Dry Van equipment. The record yields observed in August are anticipated to extend into September, sustaining this trend. The increased export demands that began in late summer will likely persist, keeping rates high and capacity tight.
• Back-to-School Freight Demand: The demand for Dry Van equipment is expected to slightly ease in early September as the back-to-school rush winds down. However, this temporary relief may be short-lived as retailers begin preparing for the upcoming holiday shopping season. The high inventory levels noted in August will influence September’s freight dynamics, with retailers aiming to restock and reposition goods in anticipation of increased consumer spending.
• Construction Projects: September typically marks a high point for construction activities, particularly in Texas and California. The demand for Flatbed equipment will likely remain strong as major infrastructure and development projects continue. Data from August, showing a significant increase in construction permits, indicates that this trend will continue, with high Flatbed demand and increased competition for available capacity.
• Port Operations: The East Coast ports, especially Savannah, are expected to face ongoing congestion in September due to rerouted shipments from the West Coast. Although the improvements at West Coast ports have alleviated some pressure, the continued high volume at East Coast ports will likely keep delays and capacity challenges in play. August’s 25% increase in container volumes at these ports suggests that shippers should prepare for sustained congestion and plan accordingly.

Market Predictions:

• Capacity Trends: As we move into September and the upcoming Q4 2024, we anticipate a gradual tightening of capacity across all equipment types, including Dry Van, Reefer, and Flatbed. This is due to increased retail demand driven by holiday preparations, ongoing agricultural activities, and construction projects. The post-summer peak in shipping volumes typically eases slightly, but the buildup to the holiday season will soon reverse this trend, particularly impacting major distribution hubs and urban areas.
• Rate Trends: Spot rates are expected to begin rising steadily as we approach the peak holiday shipping season. Historical trends show that demand increases for Van equipment, particularly for moving consumer goods, will lead to rate hikes. Seasonal agricultural shipments and continued construction activities will maintain pressure on Reefer and Flatbed rates in select regions.
• Post-September Market: As we transition into the fall, market activity may begin to stabilize; however, the lead-up to the holiday season will keep freight demand high. The ongoing agricultural and construction projects will continue to support elevated market activity levels.

Seasonal Trends and Consumer Demand:

• Back-to-School and Holiday Shopping: August’s back-to-school shopping led to an 8-10% increase in consumer spending, boosting freight demand​. This surge will taper off in early September, creating a brief lull. However, freight demand will rise again by late September as retailers gear up for the holiday season, particularly for Black Friday and Cyber Monday. This preparation phase will tighten capacity and may increase spot rates, marking the start of a busy end-of-year shipping period.
• Produce Season Impact: The demand for Reefer equipment will stay high in September, driven by ongoing harvests across key agricultural regions. California, Florida, and Texas continue to see strong demand due to grapes, tomatoes, and strawberries. The Midwest is also a critical player, with apple and corn harvests ramping up in Illinois, Iowa, and Michigan. Tight capacity and elevated rates are expected to persist, particularly in these areas. As the season progresses, shippers should anticipate potential delays and plan for higher costs due to increased demand.
• Construction and Flatbed Demand: The U.S. construction industry shows mixed results in 2024. In July, building permits fell by 7% year-over-year, indicating a slowdown in new residential projects. However, total construction starts increased by 10%, driven by a strong rise in nonresidential buildings and infrastructure projects​, with California; has seen a 13% increase in single-family home permits, reflecting strong demand for residential housing. Conversely, multifamily housing permits dropped by 27%, the lowest in over a decade, signaling a shift towards less dense housing options and Texas; continues to experience robust construction activity, with a 41% increase in residential construction permits in the first half of 2024. This growth supports high demand for flatbed trucks to transport building materials​.
  • Regions with Low Starts or Decline:
    • Midwest: Significant declines in construction activity continue, making it the region with the most pronounced downturn in July 2024​.
    • Northeast: Both new construction and alteration activities have declined year-over-year​.
    • Southwest: A slight decline in new construction starts reflects potential market saturation and higher borrowing costs​.
• Grain, Dairy, and Beverage Movements: Seasonal demand for grains and beverages will continue to drive freight volumes in the Midwest, California, and New York. The increase in grain shipments observed in August is expected to persist, supporting high demand for transportation services in September.

Ocean, Air, Port, and Intermodal Impacts

• Ocean Freight Challenges: The increase in ocean freight volumes seen on the East Coast due to rerouted shipments will likely continue into September. Geopolitical tensions, such as those affecting shipping routes through the Red Sea, will contribute to global shipping delays, influencing freight planning and costs.
• Air Freight Demand and Constraints: Air freight demand will remain strong in September, driven by the need for quick transport of high-value and time-sensitive goods. The limited availability of aircraft observed in August will continue to pose challenges, making it critical for businesses to plan ahead and secure capacity early.
• Rail Strike Resolution: What Happened and What Was Avoided:
  • Quick Resolution of the Rail Strike: The recent rail strike in Canada, involving two major rail operators, was swiftly resolved through negotiations, avoiding significant disruption. The strike, which focused on labor contracts, was quickly settled to prevent delays in shipments across critical supply chains.
  • Potential Impact of the Strike: Had the strike continued, it could have severely impacted the transport of essential goods, especially grain shipments from the Midwest to export ports, disrupting the North American supply chain. Prolonged disruption would have led to shortages, increased shipping costs, and delays in goods reaching their destinations, significantly affecting industries dependent on rail transport.
  • What Was Staved Off: With the quick resolution, the economy avoided a potential ripple effect of supply chain delays, increased freight rates, and congestion in other modes of transport as companies sought alternatives. This also helped maintain stable prices for consumers and ensured that businesses reliant on timely rail shipments continued their operations without interruption.
• Predictions and Impacts: The congestion and high demand at major East Coast ports will continue, affecting processing times and shipping costs. Rates for all types of freight equipment are expected to remain elevated due to persistent high demand, seasonal factors, and the impact of fluctuating fuel prices. Intermodal solutions will remain a reliable and cost-effective option for long-haul transportation, with investments in rail infrastructure supporting efficient freight movement.

Seasonal Trends

• Van Shipments: After the back-to-school rush, which led to an increase in freight demand, a slight dip is expected in early September. However, demand will likely pick up again towards the end of September as retailers start stocking up for the holiday shopping season. The transition from the back-to-school period to holiday preparations means that while there may be a brief lull, overall, the demand for Van equipment will remain high. Shippers should plan early to avoid capacity shortages and potential rate increases as holiday preparations accelerate
• Reefer Shipments: Reefer demand will remain strong through September, driven by ongoing produce harvests, particularly in states like California, Texas, and Florida. Crops such as apples, grapes, and various vegetables will continue to require temperature-controlled transportation. In addition, the increase in dairy and beverage shipments typically seen in September will add to this demand. The higher rates and tight capacity observed in August are expected to persist, necessitating early bookings and strategic planning to manage logistics effectively.
• Flatbed Shipments: While the demand for Flatbed equipment will remain high in September due to ongoing construction projects, this demand is expected to decline as we move into Q4. As winter approaches, construction activity typically slows down, which may ease some of the capacity constraints. However, in the immediate term, shippers can still expect high demand and tight availability, particularly in areas with significant infrastructure projects.

BM2 NEWS

• We proudly welcomed 5 new team members to the BM2 Crew! From new college Grads to talented professionals changing industries, our newest class proves that careers in freight are limitless!
• Community engagement. BM2 is excited to be engaged in a partnership with NKU college of business. Our engagement into the success of the students at this university has provided internships, community engagement opportunities for BM2 and New graduates!
• August 28th, 2024 – BM2 very own Snr. Operations Support Manager Carla Bay, was a moderator on T&LC Virtual Workshop for Claims & Loss Prevention!

DID YOU KNOW

• At BM2 Freight, we uphold a 75% prebook percentage for shipments tendered to us with a 24-hour lead time. This proactive approach ensures that drivers are assigned to your shipments in advance, minimizing the risk of service failures, delays, and increased costs due to fallouts. Trust BM2 Freight to deliver your goods reliably and efficiently.

INDUSTRY NEWS TO KNOW

• CargoNet | The cargo theft prevention and recovery network
• State of Freight Today (ftrintel.com)
• US ports by volume: How maritime cargo trends are stacking up | Supply Chain Dive
• Gasoline and Diesel Fuel Update – U.S. Energy Information Administration (EIA)
• Canada diesel prices, 19-Aug-2024 | GlobalPetrolPrices.com
• Truck Tonnage Index (TRUCKD11) | FRED | St. Louis Fed (stlouisfed.org)
• All Employees, Truck Transportation (CES4348400001) | FRED | St. Louis Fed (stlouisfed.org)
• Producer Price Index by Industry: Truck Trailer Manufacturing: Truck Trailers and Chassis, Axle Rating 10,000 Pounds or More (PCU3362123362121) | FRED | St. Louis Fed (stlouisfed.org)
• Construction Snapshot for July 2024 – Building Permit Data
• 2024 back-to-school survey | Deloitte Insights
• Back-to-school survey shows increased spending for US consumers – Retail Insight Network (retail-insight-network.com)
• USDAFarmer’s Report – Produce Prices & Market Trends | US Foods
• US_2024.pdf (usda.gov)
• How freight fraud became the perfect crime – FreightWaves