As Holiday noise dissipates, over the road volume is returning to familiar patterns at peak season levels.
Consumer demand, which has played a crucial part in supply chain disruptions up to this point, is still going strong. But that can’t be the case forever. With that in mind, many analysts are looking toward a decline in consumer spending to usher in some long overdue relief for the domestic supply chain. Now, in the past this kind of disruption was alleviated by a flood of new capacity, However with continued bottlenecks and manufacturing issues for new trucks, it is much more likely that supply chain bottlenecks will decrease when consumer spending does.
The parcel market is changing rapidly. As final mile costs increase due to GRI’s and additional surcharges, businesses are leveraging more options such as regional carriers, curbside pickup, and BOPIS. We feel like these changes are ushering in a new era for parcel as the lines between retailers and parcel service service providers continue to blur.
Beginning January 16th, UPS is imposing a Peak/Demand Surcharge that will apply to all U.S. domestic, import, and export shipments that qualify for Additional Handling. This surcharge will impact customers who have shipped more than 1,000 total packages or more than 10 packages that require Additional Handling or are classified as Large Packages during any week since February 2020.
Demand for over the road capacity has adjusted after the holiday season, following a pretty recognizable pattern indicated by a 9% increase over last week. Currently, shipper’s are requesting between 11,500-11,700 loads per day which is 2.35% higher than 2021 and a massive 40% higher than 2020. Of those 11,500-11,700 loads, about 22% are being rejected. Historically, rejection rates tumble at the start of the year but because demand remains high, so do rejections. Overall the amount of loads hitting the road has increased by a little more than 12% compared to 2021.
Spot rates are moving sideways with zero change after last week’s $3.56 per mile average and are trending 17% higher than this time last year and 20% higher than in 2020.