Port congestion continues. And yet, over the road volume and capacity haven’t surged this month. Does that mean elastic capacity is over?

Capacity

Imports continue to pile up on the West Coast, and while markets in November cool down there’s still a lot of goods that are going to need to move. Meanwhile, the impact of dwell time fees at the ports of Los Angeles and Long Beach haven’t quite made a splash. Even though there are a lot of goods that need to be moved, over the road markets are cooling down (more on that later). More loads are getting out the door and the demand for loads is lower. But this doesn’t mean that capacity isn’t tight. It’s the same as it was this time last year since no new capacity has hit the market.

Logistics Policy

The $1.2 trillion infrastructure bill passed last week. The bill ensures funding for roads, bridges, passenger and freight rail, coastal waterways, inland waterways, and port infrastructure. It also contains provisions that make 18-21 year olds eligible to drive trucks on the interstate as well as hours of service exemptions in various cases.

Logistics Tech

Walmart is now using completely driverless box trucks to distribute items in the Bentonville, AR area. The two vehicles are successfully navigating a 7-mile route for twelve hours each day. Autonomous vehicle company Gatik, who has been working with Walmart since 2019 says this is not a demo and that autonomous vehicles are here to stay. 

Domestic Freight

Domestic freight continues to move sideways as November experiences a slow start. Demand for loads is staying just under 15,500 loads per day and rejected loads are between 19%-20%. Compared to this time last year when 27% of all loads were being rejected, this is a major improvement. Despite these lower rejection rates capacity remains tight. Unless new capacity floods the market, it will be difficult to secure between now and the remainder of the year.

Spot Market

Spot rates are also trending sideways coming in at $3.43 a mile on average. This is a little lower than October or even September, but spot rates are still up 20% compared to last year. We do anticipate an increase in spot rates between now and the end of the month as capacity is tight. Spot rates will be in higher demand as contract capacity is harder to secure.