With parcel peak season on the way everyone wants to know if markets will cool off between now and October.


Capacity tightness has been a theme this year. It started in October of 2020 because of high consumer demand, and it’s continued but it’s for multiple reasons. The current capacity crunch is largely being fueled by restocking and not so much accelerated consumer spending. “Consumer spending is still high,” Jimmy Paton of SwanLeap explains, “but it’s not as high as it was in October after Prime day of last year. There’s sort of a cycle at play, so analysts are predicting that capacity crunches like this could last well into 2022 because there’s a lot of the infrastructure that isn’t built out yet and there’s a lot of archaic practices and processes in Global Supply chains.”

Paton describes the environment “The current cycle goes a little bit like this: an increase in consumer demand depletes the stock of items. Then, manufacturers had a hard time bringing those items back and restocking those items because there were global pandemic shutdowns. Right now, the supply chain is hindered and impeded because the demand for goods and sale of goods is far outpacing the ability of manufacturers to restock. You would think that we would eventually level out, that as things open up again, consumer demand is going to shift from different categories.” Paton continues, “there will still be a lot of online retail but there won’t be as much as there has been. There’s going to be more spending on events and on brick-and-mortar stores and different things like that. However, there is another variable that’s contributing to this and that’s the Delta variant of the Covid-19 virus, which is running wild in the rest of the world, causing more shutdowns and causing manufacturing to slow down.”

If the virus persists, then it’s going to continue to create disruptions in the supply chain on the supply side and so the demand side is going to maybe taper off a little bit. However there’s not going to be enough supply to meet the tapered off demand. “It seems pretty unlikely, given the year that we’ve had, that there would be a slow down or a tapering off of tight capacity and elevated markets between now and October [2021].” says Paton.



Speaking of October, that’s when parcel season is supposed to begin (we wrote an article with some actionable steps you can take right to prepare for parcel peak season). If you were a high-volume parcel shipper last year, you know that the market was unprecedented. That word gets thrown around a lot, but it truly was something unlike anything anyone has ever seen before. “Now is really the time to take some proactive steps and get ready for a peak parcel season and for some of those changes.” suggests Paton.



Domestic freight capacity has loosening a little. Electronically tendered loads are holding steady at about 15,000 electronically tendered loads per day. “That’s a pretty high level of loads, so that signifies that demand for freight is high.” observes Paton. “In fact, it’s only a couple thousand loads per day lower than the peak season average from last year, which was 17,000 loads per day.”

Meanwhile, outbound tender rejections — an indicator of capacity and how tight it is or how loose [capacity] is — have fallen about 3%, so on average 22%. For the majority of this year, 1 out of every 4 loads has been rejected; 25% on that rejection index and the highest that we saw was 28%. Reefer rejections have been astronomically high this year at 45% – 50% of all loads being rejected back in April. “Right now things are loosening a little bit at about 32%, so there’s a little more reefer capacity.” shares Paton.

As a general rule, domestic capacity tightness follows import volumes. “You should look for capacity tightness to follow the markets that have the highest volume of imports. [For example] If you see import numbers increasing for the Port of Los Angeles, then you can expect tighter capacity in any lanes that intersect with that. Remember, as ports continue to back up, importers will look for other avenues to get their goods in. Sometimes it looks like air freight, but historically, it has looked like moving around to different ports.” When imports begin to move around, capacity becomes elastic and will impact different markets at different times.



Spot market rates have decreased slightly at $3.31 a mile, inclusive of fuel. “The spot market follows rejection rates very closely, so if there’s a high volume of rejections of contracted rates, people will start looking to the spot market to try to find capacity.” explains Paton. “When that happens, and the demand for spot market goes up, the price of spot freight will increase.”



Consumers are still spending at 20% higher than they were before the pandemic. However, things are moving a little sideways and kind of slowing down. Child tax credit funds are starting to hit bank accounts and starting to roll in in the form of checks in the mail. “With new money there will continue to be more money put into the economy and we’ll continue to see what happens in terms of the economic rebound — especially between now and the beginning of peak parcel season.” says Paton.