By Blair Grant, CTB
The year 2020 has proved to be a roller coaster, and the logistics industry has experienced its fair share of volatility.
At CTE Logistics, we pride ourselves on keeping a watchful eye on local and national trends and how they might impact our clients. Yes, we give a ship.
One of the data sources we monitor is the Cass Transportation index, which gives us relevant information about monthly freight activity and indicates economic trends in North America. Here are some of the lessons and takeaways we’ve analyzed, based on the latest data, and ways we’ve chosen to respond:
1. We believe (and hope) we’re at the bottom of shipment volume decline. Most sources are reporting shipment volumes dropped 22% vs April 2019 levels, April truck tonnage declined 11.3% compared with year-ago levels, the steepest year-over-year decline since 2009, American Trucking Associations reported. We hope and believe this will mark the bottom.
2. We’re experiencing a stronger May, and June should be better for shipment volumes, as the U.S. economy slowly begins to re-open and some manufacturing plants turn back on. Among the carriers, April was much like March in that if you moved groceries, home improvement, e-commerce, and consumer staples. There was a steady demand, while restaurant, auto, and most retail were essentially not moving anything. Volumes declined anywhere from 10%-25% for most carriers across most modes in the U.S., including truckload, LTL, and intermodal. We’ve never seen anything like this, so it is impossible to predict exactly what it will mean for freight as we move through the year.
3. Pre-COVID-19 estimates and projections are no longer relevant. In April, rates felt the impact of the volume drop last month. Supply and demand determine truckload rates, and there’s nowhere to hide when volumes take a plunge as we saw in April.
4. Bigger companies are moving at less cost, which will have a ripple effect. As you may have seen in recent news, some mega brokers are moving loads at less than cost, which will only hurt drivers and push more trucks off the road in the future. We at CTE Logistics, a Freight Management Partner, can’t compete with some of that nor would it be healthy for anyone if we did. For example, why would a billion dollar company losing hundreds of millions be driving prices below cost and lose more money? It isn’t sustainable and is only prolonging the inevitable and taking carriers and drivers out with them. We are concerned some of the inflated capacity and downward rate pressure will cause a negative whiplash effect in the months to come as things open back up.
5. Partnerships are more critical than ever. We are watching both the demand side and the supply side to see when rates may improve and be stable and healthy for shippers and carriers alike, because we all need each other. Partnerships are more important than ever before. We have always worked hard to be a good partner and practice reciprocity to both our clients and our vendors. We are working with our clients and carrier partners to keep rates at healthy and sustainable levels for everyone’s future business stability as we are building this together.
Can we be of service to your organization’s transportation needs? A member of our team would be happy to provide you with a quote. Visit https://www.ctelogistics.com/transportation-quote-request.