Redwood Report: Market Intel for June 2, 2023 – Redwood Logistics : Redwood Logistics
With Memorial Day now behind us the unofficial begin to summer time is right here. We proceed to see seasonality affect the produce markets throughout the south whereas the northern half of the nation is in its seasonal trough. With FreightWaves SONAR’s Outbound Tender Rejection Index (9,022) working on a seven-day transferring common, we see an artificially low studying this week as a consequence of Memorial Day. This 16% drop-off in tender volumes from pre-Memorial Day to post-Memorial Day is sort of similar to 2022’s decline, indicating that as of proper now, we’re not seeing an accelerated descent from baseline freight volumes.
However what ought to we count on for the remainder of the summer time freight market as gentle situations stubbornly proceed? Any change in sight? Get the lowdown on this week’s replace.
Watch This Week’s Redwood Rundown
It appears like we could have dodged the debt ceiling doomsday eventualities, besides the post-Memorial Day market continues to be gentle. Nonetheless, there are just a few main markets heating up. Take a fast pulse on the place we’re at heading into June with our 2-minute Rundown:
Summer season Freight Market Degree-Set: South & North Imbalances – U.S. & Mexico
Regardless of all of the pressures which have been felt out there over the past 2 weeks, now we have seen tender rejections transfer up by a measly 0.7% over this time. Brokerages and enterprise-level carriers alike are absorbing operational ache so as to maintain onto the traditionally profitable contract freight as spot costs sit effectively under breakeven stage for carriers, even with the speed will increase now we have seen over the past 2 weeks.
There are some markets tightening, although, significantly within the southern U.S. as seasonal peak begins in Georgia (Atlanta 4.4 to 1 load-to-truck ratio), together with neighboring markets of Alabama, South Carolina and North Carolina. Beverage season, particularly forward of the Fourth of July vacation will proceed to generate quantity all through the south, with ripple results into the Midwest, although the northern half of the U.S. stays a shipper’s market.
We additionally need to spotlight the affect of nearshoring on the home freight market, a seamless pattern. Northbound rail volumes from Mexico to the U.S. are up about 34% 12 months over 12 months, and we are able to see the sustained uptick in quantity. Whereas rail volumes and truckload volumes will not be the identical, it is a sturdy indicator to the general motion of freight. On the flip aspect, we see a decline in southbound freight quantity from the U.S. to Mexico by -23% 12 months over 12 months. This huge imbalance between northbound and southbound freight volumes leaves capability displaced with no backhaul as soon as a Mexican service delivers on the border, which results in larger northbound charges for service suppliers in Mexico. Till this imbalance eases with an inflow of southbound charges, search for northbound Mexico charges to stay stubbornly excessive.
Total, we stay dedicated to intently watching the summer time freight market indicators of provide (employment, truck orders/gross sales/cancellations, authorities) and stock ranges, as any stress that may create a real sea-level change on this market can be tied to the restocking of stock dovetailing with a big decline of provide. The decline of provide has taken longer than anticipated, however we maintain to the idea that that is inevitable given the present price surroundings, and we see additional discount of contract charges towards a gentle freight market as a probable set off to speed up these exists, organising the subsequent flip within the freight market cycle.
Prime 3 Charts for the Week
1. DAT Scorching Markets
A lot of blue, however the purple reveals the tighter markets right this moment, with a projected ripple impact in neighboring markets into subsequent week.
Information tailored into map format with permission from DAT Freight & Analytics.
2. FRED Advance Retail Gross sales: Retail Commerce
April retail noticed the primary month-over-month enhance since January, considered one of many market provide indicators we’ll preserve a detailed eye on all through the summer time.
U.S. Census Bureau, Advance Retail Gross sales: Retail Commerce [RSXFS], retrieved from FRED, Federal Reserve Financial institution of St. Louis; https://fred.stlouisfed.org/sequence/RSXFS, June 2, 2023.
3. FreightWaves SONAR Northbound & Southbound Cross-Border Rail Volumes
Bonus 2-in-1 chart characteristic: You may see simply how imbalanced northbound (620.71) vs. southbound (411.29) rail volumes are, as mentioned above, illustrating the nearshoring pattern but additionally difficult capability steadiness.
Information shared with permission from FreightWaves.
In search of Even Deeper Market Insights?
Are shoppers going to be imbibing sufficient drinks to boost freight volumes this summer time, or will it’s freight planners consuming their fair proportion as they navigate the continued gentle summer time freight market? Regardless of the market holds, we’ll preserve you within the know.
Observe the Redwood LinkedIn web page to catch our Redwood Rundown movies sometimes on Tuesdays throughout non-holiday weeks, plus coming quickly you’ll give you the chance to join unique deeper weekly market insights by way of electronic mail on Wednesdays. And preserve checking again to our insights weblog for these weekly highlights.
