With carriers focusing on California, contract capacity is harder to secure. And with no end in sight, rates will rise come GRI season.

Capacity

Peak season is officially upon us. For most of us who have been paying attention it probably feels like it’s never ended, which means that we’re in for one heck of a season. Over the road capacity continues to be diverted toward the West Coast as that’s where the most imports are stacking up right now. This complicates things in the Northeast and Midwest by limiting capacity, particularly contract capacity, making it harder to ship in those lanes. It also adds a layer of complication for any imports on the East Coast. Because of port congestion on the West Coast some businesses were diverting their imports to the East Coast. However, because the supply chain at this point is so dependent on over the road capacity to move goods inland, that strategy might not pay off in the long run. Either way, there are more goods coming into the US than there are trucks to haul those goods and businesses want those goods as quickly as possible.

Domestic Freight

As far as those domestic freight numbers are concerned, we’re seeing a demand for capacity between 15,500-16,000 loads per day. Of those loads, around 20-22% will be rejected, meaning not all of those loads make it out the door. Even though 22% of those loads are getting rejected, rejection rates have stabilized compared to the first two quarters of the year. This signals that carriers and shippers alike are used to this new normal, doing what it takes to get loads out the door. 

Spot Market

Coming into Q4 we’re looking at $3.48 per mile (inclusive of fuel) on average for spot rates. This is a high starting point and it’s likely to go higher especially with contract rates being harder to secure due to capacity being diverted to the West Coast. Contract rates have already risen 25% in 2021, which means we’re looking at higher than average GRI season. In order to insulate from GRIs it’s imperative to shop spot and contract rates side by side so you can choose the option that makes the most sense for each shipment. What will make this strategy effective in a volatile market is visibility into real-time pricing data. That way you can know with certainty that you’re making the best possible choice.