November usually starts slow and then ramps up before the Thanksgiving holiday. But this year seems to be different. Instead of the radical swings in capacity we saw last year there’s been a steady stream of activity that is more manageable, but still incredibly elevated.
The week before Thanksgiving there were about 86 ships anchored off the coast of Southern California waiting to unload their goods. On average, it takes 18 days to get one of those ships unloaded and back on its way. At this point in the year port congestion is not contributing to the tremendous swings in capacity that we’ve seen, however it’s important to remember that it is the cause of a lot of disruption in various parts of the supply chain. Since there’s such a big backlog, it’s only a matter of time before more disruption occurs. The best solution for capacity right now is for the ports to gain efficiency.
Speaking of port efficiency, the ports of LA and Long Beach have lifted dwell-time fines. Since instituting the fines, they’ve seen about a 25% reduction in sitting containers, proving that fines are an effective strategy for the Ports of LA and Long Beach. This strategy has even been adopted by other ports in the United States.
Over the weekend 300-400 Fedex packages were found at the bottom of a ditch in Alabama. Officials are working with Fedex to figure out how this happened and who’s responsible. In the meantime those packages, some of which have been sitting there for about a week, are immediately being rerouted for delivery.
Over the road volume has been pretty stagnant for the month of November. Thanks to the Thanksgiving Holiday demand has been working its way up from 14,000 loads per day. Demand is trending 8% lower than it was in 2020, but it’s a stunning 23% higher than it was in 2019. That statistic demonstrates the explosive growth in demand for over the road capacity, proving what most of us already know – there are simply more loads than there are trucks to haul those loads. Despite that fact rejection rates remain manageable, hovering around the 19% mark. This is a great improvement compared to the 28% that we saw last year. But in the 2018-2019 year average rejection rates were around 7% percent, further showing the surge in demand we’ve seen this year.
Spot rates are lying flat at $3.38 a mile on average. This rate is 17% higher than it was this time last year as spot rates remain elevated compared to 2020. We do expect to see an increase in spot rates and spot market activity as we approach the Holidays due to drivers taking time off.