Market Update 2/15/2024

Logistics industry market trends you need to know.

GENERAL MARKET TRENDS

POTENTIAL MARKET DISRUPTORS

PORT IMPACTS:

  • Ongoing Challenges in the Red Sea:
    • The Red Sea region continues to face significant disruptions due to military strikes against Houthi positions, affecting global supply chains. European importers are dealing with inventory shortages due to delays, while Asian export hubs face tight space and equipment availability.
      • However, there are signs that conditions may be improving slightly as congestion levels remain minimal and carriers adjust to accommodate longer routes​​.
  • Surge in Ocean Freight Rates:
    • Ocean rates from Asia to North America have surged significantly, with West Coast rates increasing by 38% and East Coast rates by 21%.
      • Despite these increases, there’s speculation that freight rates might be nearing their ceiling, especially with the Lunar New Year approaching and potential shifts in demand.
  • Air Cargo as an Alternative:
    • There has been a moderate shift towards air cargo due to delays in ocean shipping. China-North America air cargo rates climbed by 11% last week, indicating a response to the ongoing disruptions.
      • This suggests that some shippers are exploring alternatives to navigate the current challenges in ocean freight​.

SEASONAL TRENDS:

  • Spot Rate Trends:
    • Spot rates across the trucking industry, including dry van, refrigerated, and flatbed segments, have continued to decline for the third consecutive week as of the week ending February 9, 2024. This trend is part of a broader pattern of lower rates and reduced load activity compared to the previous year and the five-year average. Notably, dry van rates saw the most significant drop, reaching the lowest weekly spot rate since before Thanksgiving.
  • In February, produce season typically starts in southern regions of the U.S. such as Florida and Texas, with these states becoming focal points for seasonal demand due to the influx of produce from Mexico and Latin America.
    • The surge in produce shipping from these areas affects the freight market, notably impacting outbound spot rates due to the increased demand for transportation​.
  • Capacity:
    • Continues to squeeze out of the market from its October 2022 and July 2023 highs, and accelerated in January of 2024.

TRANSPORTATION EVENTS:

UPCOMING HOLIDAYS:

  • Ramadan begins (March 10)
  • Daylight Savings Time (March 10)

WEATHER IMPACT

South, Mid-Atlantic, and New England Tranquil Weather:

  • Following a strong nor’easter, these regions are expected to experience much more tranquil weather, allowing for a period of drying out. Below-normal temperatures along the Eastern Seaboard today will give way to milder air by Thursday, gradually returning to above-normal temperatures.

Northern Plains, Upper Midwest, and Great Lakes:

  • Heavy Snowfall: A quick-hitting wave of low pressure is expected to deliver heavy, accumulating snowfall across the Northern Plains, Upper Midwest, and the Great Lakes today and Thursday. This system will move quickly, bringing several inches of snow and potentially impacting travel and daily activities in these regions.

West Coast and Intermountain West: Rain and Snow:

  • The next Pacific storm system is set to bring locally heavy rain to the West Coast and significant high-elevation snowfall to the Intermountain West over the next couple of days. This will likely affect outdoor activities and could lead to hazardous travel conditions in mountainous areas.

Temperature Trends:

  • Cooling Down: A cold front following the low-pressure system will bring modified Arctic air south from Canada, leading to below-normal temperatures across the northern Plains and Midwest by the end of the week.

WPC’s Short Range Public Discussion (noaa.gov)

INDUSTRY NEWS TO KNOW

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Market Update 1/30/24

Logistics industry market trends you need to know.

General Market Trends

 Deisel National Averages: This Week: $3.838 Last Week: $3.863 Weekly Change: $0.025 Year over Year Change: $0.766 Reference: Gasoline and Diesel Fuel Update - U.S. Energy Information Administration (EIA) National RPM Month to Month Changes: Dry Van Markets (Dec to Jan): $0.03 per mile Reefer Markets (Dec to Jan): $0.09 per mile Flatbed Markets (Dec to Jan): $0.05 per mile

Potential Market Disruptors

Port Impacts:

  • Red Sea Shipping Crisis: The Red Sea is experiencing a dramatic impact on global shipping and trade due to attacks against commercial vessels. These disruptions, caused by Houthi rebels, have led to a severe reduction in shipping traffic through the crucial Suez Canal, which accounts for a significant portion of global trade. The crisis is not only raising costs but also contributing to increased greenhouse gas emissions due to longer shipping routes. Container ship transits have declined drastically, and liquefied natural gas (LNG) carriers have ceased transiting the area altogether since mid-January 2024.
  • Ocean Freight Market Dynamics: The dynamics of global logistics continue to evolve, impacting trade patterns and inflationary pressures. While ocean freight prices have seen a downward trend, recent developments like the Houthi attacks and Red Sea diversions have led to a spike in ocean rates across ex-Asia lanes. This has resulted in carriers responding with increased rates and surcharges, and the industry anticipates capacity shortages and congestion in the coming weeks.
  • Optimism in US Ports: Despite global challenges, there is optimism among US port leaders for 2024. With unprecedented federal investment in ports, there’s a focus on expanding port capacities, reducing carbon emissions, and enhancing digital capabilities. Major projects are underway to modernize ports like Los Angeles and Long Beach, and there’s a strong focus on developing green hydrogen hubs​.

Seasonal Trends:

  • Winter Weather Impact: With the onset of winter, expect disruptions in freight movement due to severe weather conditions, including snow and blizzard-like events.
  • Produce Market Influence: The influx of produce entering the market in and from the Southwest and Florida has sparked an increase in rates, with the additional volume from the produce market, expect a tightening of capacity.
  • 2024 spot rates have held onto their holiday momentum, only falling modestly by $.05/mile after the recent peak, suggesting an upturn in freight flow, while the ongoing Red Sea crisis and global events like the Chinese New Year continue to influence shipping routes and costs, potentially impacting future rates and market dynamics.
  • Capacity: Continues to squeeze out of the market from its October 2022 and July 2023 highs.

Transportation Events:

Upcoming Holidays:

  • Chinese New Year (Feb. 10)
  • Valentine’s Day (Feb. 14)
  • Ramadan begins (March 10)

Weather Impact

Outlined map of North America showing weather trends in certain regions

  • Northeast, Mid-Atlantic, Southeast, Gulf, Midwest, Great Plains, Texas, and Southwest:
    • A warmer and sunny weather pattern is expected across these regions. High temperatures could reach the upper 50s to lower 60s, with a generally dry period until late in the week. Rain is not expected until late Friday at the earliest.
  • California:
    • Warmer and sunny weather initially.
    • Atmospheric river storms expected, potentially causing high-end flooding, beach erosion, mudslides, and heavy mountain snow.
    • Northern California at risk for flooding starting Wednesday.
    • Southern California to experience very rainy conditions on Thursday.
  • Pacific Northwest:
    • Steady rains initially, with the atmospheric river storm soaking the region.
    • Rainfall totals reaching 2-3 inches in the mountains and up to about 1.50 inches in the lowlands.
    • The storm track expected to lift north, with another, stronger atmospheric river storm focusing on Vancouver Island and southwestern British Columbia, but also impacting northwestern Washington.
  • WPC’s Short Range Public Discussion (noaa.gov)

Industry News to Know

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Market Update 1/11/24

GENERAL MARKET TRENDS

POTENTIAL MARKET DISRUPTORS

PORT IMPACTS:

  • Red Sea Crisis Impact: The ongoing crisis in the Red Sea, including Houthi rebel attacks, is prompting shifts in shipping routes, leading to longer transit times and increased costs. This has resulted in a surge in ocean-shipping rates and additional fees, as carriers divert from the Red Sea to avoid conflict zones.
  • Airfreight as a Mitigation Strategy: Shippers are considering the use of airfreight to counter delays caused by the Red Sea crisis. However, airfreight rates haven’t yet shown significant changes, but an increase is anticipated in the near future.
  • Future Rate Trends: Despite the current rate hikes due to the Red Sea situation, there is an expectation that rates might decline post-Chinese New Year, as the industry adapts to the routing changes and deals with the excess capacity challenges

SEASONAL TRENDS:

  • Winter Weather Impact: With the onset of winter, expect disruptions in freight movement due to severe weather conditions, including snow and blizzard-like events.
  • Produce Market Influence: The influx of produce entering the market in the Southwest has sparked an increase in rates, with the additional volume from the produce market, expect a tightening of capacity.
    • The end of 2023 saw muted freight demand with tender rejections and spot rates below 2022 levels, yet early 2024 has brought a modest rise in spot rates.
  • The market is witnessing a quick recovery in tender volumes post-holiday season, suggesting an upturn in freight flow, while the ongoing Red Sea crisis and global events like the Chinese New Year continue to influence shipping routes and costs, potentially impacting future rates and market dynamics.

TRANSPORTATION EVENTS:

UPCOMING HOLIDAYS:

  • Chinese New Year, February 10th
  • Valentines Day, February 14th
  • Start of Ramadan, March 10th

WEATHER IMPACT

  • Eastern U.S.: Expect a major winter storm, with heavy snow (6-12 inches) and blizzard conditions from eastern Nebraska to central Michigan. Minor flooding is possible in the northern Mid-Atlantic and Northeast.
  • Southern Plains to Michigan: Rapidly intensifying low-pressure system bringing severe weather, including possible tornadoes and wind gusts.
  • Northern Rockies and Plains: Dangerously cold temperatures persisting, with highs below zero in some areas.
  • Forecast for the Week:
  • Midwest and Ohio Valley: Cold arctic air following the storm, with below-average temperatures continuing.
  • Intermountain West and Rockies: Multiple snow events, especially heavy along the Oregon and California coasts.
  • Implications:
    • Prepare for potential disruptions in the Eastern U.S. and Midwest.
    • Monitor local advisories for safety and operational planning.
    • Expect possible delays and adjust logistics accordingly.
  • WPC’s Short Range Public Discussion (noaa.gov)

TEMPERATURE TRENDS

  • Storm warning across North America

INDUSTRY NEWS TO KNOW

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Market Update 12/29/2023

GENERAL MARKET TRENDS

POTENTIAL MARKET DISRUPTORS

PORT IMPACTS:

  • Port Recovery not expected until 2025.
  • Previously, the west coast was yielding more tonnage to the east, we are now seeing it return to the west.

SEASONAL TRENDS:

  • We’re seeing a notable reduction in market capacity, driven by factors like bankruptcies, holiday periods, and operators sidelining their trucks.
    • This, coupled with declining load volumes and increasing rejections, is setting the stage for a distinctive trend.
  • First week of Q1: Expect a surge in rates.
    • This is a direct consequence of the tightened capacity and the current market’s response mechanisms.
  • After first week of Q1: Anticipate a shift as truck capacity re-enters the market.
    • This change, along with a rebound in load volumes, will lead to a decrease in rates, eventually stabilizing after an initial fluctuation in January.

TRANSPORTATION EVENTS:

UPCOMING HOLIDAYS:

  • New Years (Monday, January 1)
  • Chinese New Year (Saturday, February 10)
  • Ramadan begins (Sunday, March 10th)

WEATHER IMPACT

North American map highlighted with different colors to reflect weather events

Northern and Central Plains

Current Situation: Winter weather warnings and advisories related to the recent blizzard have been discontinued.

Forecast: The upper-level circulation associated with the storm will gradually diminish. Mixed rain and light snow are expected to taper off by the afternoon.

Midwest

Forecast: Wrap-around moisture from the Great Lakes will bring mixed rain and wet snow today, with only minor snow accumulations due to temperatures being just above freezing.

Northern Mid-Atlantic to Southern New England

Weather Event: A strengthening coastal low is causing moderate to heavy rain.

Impacts: Potential for excessive runoff and flooding, minor coastal flooding expected in the New York City metro area due to high tides.

Movement: The heavy rain will move across southeastern New England by the afternoon, with the possibility of moderate rain rotating back towards the southeast New England coast later.

Northeast and Maine

Forecast: On-and-off rain showers will linger, potentially changing to light wet snow over Maine on Friday. Light wet snow will also continue along the Appalachians.

Florida

Forecast: A round of rain is expected to pass through southern Florida, influenced by a subtropical jet stream and a low-pressure wave.

West Coast

Weather Systems: A couple of large Pacific cyclones.

Forecast: These will produce unsettled weather, with rain and high-elevation snow over the Pacific Northwest and California. Dry conditions are expected for much of the rest of the western U.S., with mixed precipitation reaching the Great Basin by Saturday morning.

Temperature Trends

  • Northern Tier and Western U.S: Milder than normal temperatures
  • Southern Tier to Southeastern U.S: Cooler than normal conditions will shift across these regions.
  • Notable: Mild overnight temperatures from the northern Plains to the Northeast are expected to be more than 20 degrees above normal, likely setting records for warm minimum temperatures, especially this morning.

WPC’s Short Range Public Discussion (noaa.gov)

INDUSTRY NEWS TO KNOW

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Market Update 12/15/2023

Logistics industry market trends you need to know.

GENERAL MARKET TRENDS

POTENTIAL MARKET DISRUPTORS

PORT IMPACTS:

  • Port Recovery not expected until 2025
  • US ports are trending to have a 12.8% year-on-year drop in TEU
  • US ports are estimated to 1.99 million TEUs in Oct and will see a decline in Nov and December to 1.92 million TEUs

SEASONAL TRENDS:

  • Reefer and Van demand continue to increase
  • FTL rates should rise to the end of the year
  • The Fed continues to hold its rate and is expected to hold into 2024; where it stated that there will be 3 cuts
  • Holiday push saw retail sales rise .3%, online sales 1%, while department stores fell 2.5%

TRANSPORTATION EVENTS:

UPCOMING HOLIDAYS:

  • Christmas (Monday, December 25)
  • New Years (Monday, January 1)
  • Chinese New Year (Saturday, February 10)

WEATHER IMPACT

Southern Colorado, Northern New Mexico, Texas/Oklahoma Panhandles

Weather System: A digging upper low.

Impact: A low pressure system beneath a digging upper trough.

Forecast: Snow over the mountains of southern Colorado and northern New Mexico, extending to the Texas/Oklahoma panhandles

Snow Levels: Additional 4-8 inches expected through early Friday morning.

Movement: East

Additional Weather: Scattered showers and thunderstorms are likely in eastern and southern New Mexico, spreading east through western and central Texas/Oklahoma today.

Temperatures: Below average due to winter conditions and cloud cover for today and tomorrow.

Southern Florida

Weather Feature: A quasi-stationary front.

Forecast: Showers and thunderstorms starting this afternoon, with increasing rainfall leading to a heavy rain event on Saturday.

Risk: Slight Risk (at least 15%) of Excessive Rainfall, particularly in southeast Florida, including the greater Miami metro area.

Concerns: High rain rates over urban areas may lead to flash flooding. There is significant uncertainty regarding the system’s development due to discrepancies in model predictions.

East Texas/Oklahoma and Western Gulf Coast

Forecast: The low-pressure system will bring more showers and thunderstorms into these areas on Friday

Western US and Northern Tier of the Country

Weather Influence: High pressure on both sides of the upper trough.

Forecast: A warming trend over the next few days.

WPC’s Short Range Public Discussion (noaa.gov)

INDUSTRY NEWS

Freight cycle bottom continues to form in November – FreightWaves

We’re still at risk for another ‘everything shortage’ – FreightWaves

Retail Sales Rise 0.3% in November as Holiday Rush Begins | Transport Topics (ttnews.com)

Fed Keeps Rate Unchanged, Signals Cuts Coming Next Year | Transport Topics (ttnews.com)

Logistics companies race to adapt to shifting supply chains | Supply Chain Dive

As manufacturers turn away from China, Vietnam lures investment | Supply Chain Dive

 

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Market Update 11/30/2023

Logistics industry market trends you need to know.

General Market Trends

Potential Market Disruptors

Port Impacts:

Seasonal Trends:

  • Christmas Trees throughout the northwest and other areas.
  • After slower than expected start to the Texas crop the yield has now caught up, expect a similar turnout as last year.
  • Mexican growers have growing concerns of water as Mexico vegetables show growth in US imports.
  • Amazon cites record breaking sales starting holiday season.

Transportation Events:

Upcoming Holidays:

  • Christmas (Monday, December 25)
  • New Years (Monday, January 1)
  • Chinese New Year (Saturday, February 10)

Weather Impact

East: High temperatures will once again be chilly and below average by about 15-20 degrees Wednesday along the East Coast and into the South as broad upper-level troughing remains in place over the region. Forecast highs range from the 20s and 30s in New England, 30s and 40s for the Mid-Atlantic into the Carolinas, and 50s and 60s through much of the South outside of South Florida. Frost and freeze-related advisories remain in place from the Florida Panhandle into south Georgia as temperatures Thursday morning may once again dip to near or below the freezing mark, potentially damaging/killing sensitive crops and vegetation. Conditions will moderate Thursday as the upper-level trough begins to shift eastward, with highs 10-15 degrees warmer and much closer to average to close November. Some lingering lake-effect snow showers downwind of Lakes Erie and Ontario should taper off through Wednesday morning, with otherwise mostly dry conditions along the East Coast.

Plains: An upper-level wave passing quickly over the Four Corners and out over the Plains will help to encourage lee cyclogenesis late Wednesday/early Thursday, helping to organize a surface frontal system over the Southern Plains. Some light to moderate rain/snow showers will be possible in the colder air over the Four Corners region Wednesday into Thursday, with a few inches of accumulations possible in the higher mountain elevations. Showers and thunderstorms are expected overnight Wednesday ahead of the system over eastern portions of the Southern Plains and into the Lower Mississippi Valley. Continued very moist southerly flow from the Gulf and increasing shear as the upper-level wave approaches will lead to the threat of severe thunderstorms into the day Thursday over southeastern Texas. The Storm Prediction Center has issued an Enhanced Risk of severe weather (level 3/5) for the threat of a few tornadoes. Storm coverage should continue to expand north and eastward through the Southern Plains into the Lower/Middle Mississippi Valley by later Thursday into the early morning hours Friday. Some locally heavy downpours are expected, with a few isolated instances of flash flooding possible, though dry antecedent conditions in the area should keep this threat limited. Forecast highswill be running in the 50s and 60s from the Southern Plains into the Lower/Middle Mississippi Valley, with 40s and 50s for the Central Plains. Some cooler temperatures will flow into portions of the Central/Southern High Plains following a cold front passage Thursday, dropping into the 40s.

West: Some light coastal showers will be possible from central to southern coastal California Wednesday as a weak Pacific system approaches the coast. Then, a stronger series of systems will approach the Pacific Northwest/northern California by late Wednesday bringing increasing precipitation chances with lower elevation/coastal rain and mountain snow. The precipitation will spread inland into the Great Basin Thursday, with a wintry mix for the interior valleys and snow for the mountains. Some heavier snow accumulations are possible for the Cascades and Sierra Nevada, with some light to moderate snow for other regional higher elevations/mountain ranges. Any accumulations in the valleys should be limited.

Temperatures: Forecast high temperatures more broadly across the West will be in the 30s and 40s for the Great Basin/Rockies/Pacific Northwest, the 50s and 60s for California, and the 60s and 70s for the Desert Southwest. Elsewhere, conditions will be dry across the Northern Plains into the Upper Midwest. Highs will be well above average Wednesday particularly for the Northern Plains, with some temperatures into the 50s possible. Otherwise, highs will generally be in the 30s and 40s.

WPC’s Short Range Public Discussion (noaa.gov)

Industry News

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Market Update 11/15/2023