Summary for the week of April 20, 2020: The market appears to have stabilized, however as the economy starts to reopen, we can expect volatility to be the new normal. Also, we believe capacity will exit the market, further contributing to this volatility.
1. Volatility May Become the New Normal
The last few weeks have been volatile in the truckload marketplace, given quickly changing freight flows. While demand in some areas has been down, other areas and commodities have seen an increase in freight volumes. With this and uncertainty, volatility has been at an all-time high. Our carrier base has seen many challenges as a result of this market, including less volume in certain lanes and significant imbalances in particular markets. This means carriers are becoming more concerned about getting "stuck" after making a delivery. Additionally, carriers are seeing longer wait times at certain destinations due to delays at receiving. This may contribute to rate volatility in specific lanes as carriers look to find reliable freight lanes. As volume continues to taper off and COVID-19 concerns increase, it will likely push carrier capacity back out of the market, which will also contribute to volatility.
2. Driver Requirements Are Changing at Facilities
In an effort to keep their employees safe, many facilities have started to take drivers' temperatures when they arrive. Some locations also require drivers to adhere to additional requirements, including wearing masks. We will continue to communicate with our carriers regarding these location-specific policies. 3. Operating Procedures Are Changing for the LTL Market The LTL market is vastly different than truckload. As such, some LTL providers have implemented standard operating procedures for drivers across their network of terminals, including:
- Changes to the delivery-receipt procedure, such as “no signature required”
- Training and communication on proper hygiene and health monitoring
- Providing disposable gloves and masks for drivers to wear during pickup and delivery
- No longer requiring drivers to enter terminals before their routes
4. Produce Season Is Ramping Up
Though we expect produce season to be less volatile than normal, we are starting to see produce shipments begin. South Texas and southern Florida have already started shipping produce, and will be ramping up in the next few weeks. We have seen increased demand and decreased supply in these markets and expect this scenario to continue as produce season ramps.
5. Oil Prices Are Plummeting
Earlier this week, the price of oil dropped to a historic low, sinking into negative pricing as production outweighed plummeting demand. Even as trucking companies work to restock grocery stores and transport critical medical supplies, diesel prices are expected to continue on a steady downward trend. In an effort to rebalance supply and demand, oil-producing nations have agreed to reduce global oil production, but there is concern that it won’t be enough.
Still have questions about the freight market? Please don't hesitate to reach out to the Ryan Transportation team for additional information.