Despite continued record port congestion on the West Coast, over the road markets have been moving sideways for the month of November.

https://youtu.be/Y6LeXnohiu8

Capacity

Over the road transportation, while still elevated compared to 2018-2019, has been less impacted by port congestion in Q4. So what’s happening there? This year, congestion at ports has typically translated to something we call “elastic capacity”, which means that wherever you see the most congestion is where you’ll start to see over the road markets tightening. This happened frequently during Q3 as businesses were preparing for peak season. It looks like that preparation paid off, leading to the current loosening of over the road conditions. In addition to that, intermodal transportation is no longer seeing record breaking prices making it more efficient for businesses. So with a combination of heavy imports in Q3 and intermodal networks being more cost effective, over the road transportation is more manageable.

Parcel

The Biden administration plans to replace two members of the USPS and Board of Governors in what many strategists and analysts are calling an attempt to oust the current Postmaster General. Postmaster General Louis DeJoy was a controversial pick to say the least, as most of what he’s been focusing on have involved cutting service by doing things like changing priority delivery from air too over the road. But in a world where 2 day shipping is normal, that’s just not a good look for the Post Office.

Domestic Freight

In the world of domestic freight markets have definitely reached some kind of equilibrium for the month of November. Tender volumes are down 7% compared to this time last year, but they’re still high at just over 15,000 loads being requested per day. Rejection rates have managed to hover around 20% which has become the norm this month. Even though demand and capacity have found some equilibrium, markets are still incredibly elevated compared to 2018-2019 levels. Peak season will put more pressure on capacity as drivers take time off for the holidays and the potential for weather disruption is higher the further we get into winter.

Spot Market

Spot rates continue to fall coming in at $3.38 a mile on average which is still 16% higher than this time last year. Still, the holidays will put upward pressure on spot rates due to tightening capacity.