Holiday is over, what next?
The freight world has come out of the 4th of July run up and while there was a dip in volume slightly to start last week, volumes rapidly rose again to pre- July 4 levels. This has essentially provided the support for rejections to remain at high levels as well. The 4th of July has typically marked the end of the seasonal summer bump in the freight world. The 10-14 days prior tend to see high volumes and thus high spot rates with both of those retreating once the holiday passes has been the historical norm. This year has been anything but typical and in 2020 fashion, volumes remain elevated, outside of seasonal norm. So, what is going on?
Everything seems to be thrown out the window when it comes to 2020 so historical trends might not be the best indicator of what will happen with a high degree of confidence. All we can do is look to the short-term future and anticipate.
Something to pay attention to is July 31 and what happens after. This is the day when the unemployment boost from the federal government is slated to end. The US economy is consumer driven and the purchase of retail and consumer product goods seems to be what is keeping volumes high in the freight world today. If the $600.00 unemployment boost per check goes away, billions of dollars come out of the economy. These dollars are no longer being spent on retail and consumer products and freight volume will likely drop. If rejections drop with that volume, there is still plenty of capacity in the market. If rejections hold steady, even with a volume drop, the market is primed for a Q3 and Q4 capacity crunch. The administration has mentioned that they would like to see a second round of direct stimulus to the American public, but the administration is not as open to extending this boost past the end of July at current levels.
If students do not return to school this fall, will the industry see a retail bump that is usually associated with new clothes, supplies and the like in years past? Some states and regions may go back to school, others will not. That may adversely affect carrier networks, creating imbalances which will stress supply chains.
The holiday season follows shortly after. Unemployment is still very high but getting better. Unless large amounts of the unemployed get back to work, freight markets are not likely to remain stout given how much retail freight tends to move through the system. High unemployment combined with a loss of unemployment boost money must affect the purchasing habits in the economy. Absent any sort of COVID-19 vaccine, its unlikely so see large crowds of shoppers for holiday sales events. Retailers with robust e-commerce capabilities will be best positioned to take advantage. Because consumers have come to expect full inventory and lightening fast fulfillment, those supply chains need to maintain a relatively high level of inventory at all times, does the traditional freight bump still fit into that model or has freight gotten steadier across the holiday period?
The reality is no one could anticipate a pandemic that would put about 94% of all Americans into some sort of quarantine. The resulting impact upon freight and logistics had never been seen before. Volatility in volume, rejections and networks will be the result for the foreseeable future. Logistics, transportation, and supply chain professionals can no longer simply go with “we’ve always done it this way” when discussing how to approach issues in their areas of responsibility. In some ways, COVID-19 has allowed those professionals to break new ground in how they attack problems. The knowledge earned during this period is invaluable.
Loadshop™ is one of those new and exciting ways that people are exploring and taking advantage of as part of this change to our industry. We are proud to be helping our shipper partners navigate this volatility. The ability to source capacity while reducing middle entity costs, driving transparency into the business, and building new relationships is core to what Loadshop™ does. This has been valuable for both shippers and carriers as they both must navigate uncharted waters. If you are someone who has not seen what Loadshop™ can do for you, please do not hesitate to reach out. We love talking freight and we would love to help you as well. Take advantage of the Loadshop™ advantage.