No end in sight for shippers' surging supply chain costs
Amidst a mixed demand picture on the world’s largest container shipping lanes, shippers are likely ...
Hopes of US trucking rates going into reverse are fading fast.
The industry roared through December, followed by rising tender volumes in the second week of the new year, which kept pricing at elevated levels.
A recent report from Adobe Analytics suggests online shopping in the US is losing momentum, showing an 8.6% year-on-year rise in e-commerce spend between 1 November and 31 December – the slowest growth rate since 2014.
The authors point to lower sales on Cyber Monday and Black Friday as evidence of waning consumer demand.
However, retail analysts have a different view: they argue that Christmas shopping kicked off earlier, as consumers were worried about availability of goods due to supply chain snares.
Moreover, in-store retail sales grew around 8% and, overall, sales in November and December were up 14.1% year on year, according to the National Retail Federation (NRF).
“Retail sales displayed solid momentum throughout the holiday season,” said NRF chief economist Jack Kleinhenz. “Worries about inflation and Covid-19 put pressure on consumer attitudes but did not dampen spending, and sales were remarkably strong. Even though many consumers began shopping in October, this was the strongest November and December we’ve ever seen.”
Data from the US Department of Commerce for December show a drop of 1.9% from November sales, but a 16.9% annual increase.
And truckers did not see a drop in business in December: tonnage climbed 1.4% year on year, marking four consecutive months of annual gains, according to the American Trucking Association. Its data are dominated by contract freight, so the actual increase is likely to be higher.
December’s DAT Truckload Volume Index this week shows an 18% gain, year on year. DAT, which claims to operate the largest truckload freight marketplace in North America, calculated 6.5 available loads per available van on its network for December, up from 5.2 the previous month.
“While it’s not unusual to see a decline in the number of loads moved from November to December, spot market volume was historically strong last month,” said DAT chief of analytics Ken Adamo.
The December edition of the Cass Freight Index shows a 7.7% increase in shipment volumes over December 2020, up from a 4.5% rise in November. Freight spend advanced 3.4% from November to end 43.6% higher than in December 2020, according to CASS.
Both spot and contract rates climbed in December, the DAT index shows. Average spot rates for vans and reefer trucks were up 54 cents and 79 cents per mile respectively from 12 months earlier.
The upward pressure has carried through into the new year. In the week ended 14 January, tender volumes were 2.61% higher than a year ago, according to Feightwaves. Rejection rates retreated slightly, which has been attributed to more drivers returning to the roads from a longer holiday break, but they have been more than 20% up for the past 18 months, with reefer rejection rates close to 40%.
The pressure is unlikely to ease. The NRF expects further growth this year, said Matthew Shay, the organisation’s president, despite concerns over Omicron and inflation.
Tim Denoyer, ACT Research VP and chief analyst, author of the December Cass index, wrote that it climbed 38% last year, following a 7% decline in 2020.
“Tougher comparisons in the coming months will naturally slow these year-on-year increases, but just using normal seasonality from here, the increase in 2022 will still be about 25% at this trend level,” he said.