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This update is a report that analyzes data from multiple sources, including but not limited to FreightWaves SONAR, DAT, American Shipper, Morgan Stanley Research, FTR Transportation Intelligence, Journal of Commerce, and National Retail Federation(NRF).
The broken record phrase of “freight volumes continue to rise” is still in play. The current Outbound Tender Volume Index is roughly 3% higher year-over-year (YOY). We get that 3% might sound and look like a minimal increase but keep in mind volumes were accelerating quickly over the last several months of 2020. So while the comps are more challenging as we get into the more difficult months of 2021, the volumes are still dominating what they were a year ago. Our team is digesting the 2021 peak season and the factors that are currently influencing the market.
Ports Delays Continue to Rise
Many anticipated a slowdown in import activity, as ports are overburdened with operations and equipment trying to keep up with the constant influx of ships waiting to unload their cargo. But that is hardly the case. While the numbers fluctuate from day to day, there were 70 container ships in the queue on Monday in late September 2021, with a total capacity of 432,909 twenty-foot equivalent units. To put the vastness of that number in perspective, that’s more than the inbound container volume the Port of Long Beach handled in the entire month of August. It’s roughly what Charleston handles inbound in four months and what Savannah handles in two. So why the boom? Well, consumers are spending. eCommerce, a rise in CPG, the upcoming holiday season are driving demand for imported goods, requiring ships for transportation.
What happens when the cargo finally reaches the port? First, available trucks will flock to these locations due to the increased pay possibilities that this freight represents. Second, shippers and retailers waiting for their long-dormant freight will pay above-market rates to get their goods rushed directly to their destinations.
Consumers Buying Trends Continue to Increase
Consumer goods have encountered extensive growth since the start of the pandemic, and there are no signs of this trend slowing down. Employment numbers, a reliable predictor of spending, are the strongest since March of last year. While consumer spending did not need employment numbers to remain elevated for the past year, a more stable job market bodes well for the economic outlook and trends to continue. In August, consumer spending bounced back from a mid-summer lull. During the past month, it jumped .8% after a decline of .1% in July. Moreover, income rose by .2% as consumer prices increased by .4%.
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