• ITVI.USA
    15,487.730
    -50.360
    -0.3%
  • OTRI.USA
    25.300
    0.130
    0.5%
  • OTVI.USA
    15,446.060
    -51.850
    -0.3%
  • TLT.USA
    2.720
    0.000
    0%
  • TSTOPVRPM.ATLPHL
    2.550
    -0.030
    -1.2%
  • TSTOPVRPM.CHIATL
    3.030
    -0.080
    -2.6%
  • TSTOPVRPM.DALLAX
    1.450
    0.150
    11.5%
  • TSTOPVRPM.LAXDAL
    2.910
    -0.030
    -1%
  • TSTOPVRPM.PHLCHI
    1.700
    -0.040
    -2.3%
  • TSTOPVRPM.LAXSEA
    3.020
    -0.010
    -0.3%
  • WAIT.USA
    120.000
    0.000
    0%
  • ITVI.USA
    15,487.730
    -50.360
    -0.3%
  • OTRI.USA
    25.300
    0.130
    0.5%
  • OTVI.USA
    15,446.060
    -51.850
    -0.3%
  • TLT.USA
    2.720
    0.000
    0%
  • TSTOPVRPM.ATLPHL
    2.550
    -0.030
    -1.2%
  • TSTOPVRPM.CHIATL
    3.030
    -0.080
    -2.6%
  • TSTOPVRPM.DALLAX
    1.450
    0.150
    11.5%
  • TSTOPVRPM.LAXDAL
    2.910
    -0.030
    -1%
  • TSTOPVRPM.PHLCHI
    1.700
    -0.040
    -2.3%
  • TSTOPVRPM.LAXSEA
    3.020
    -0.010
    -0.3%
  • WAIT.USA
    120.000
    0.000
    0%
NewsTrucking

Food shippers adapt to volatile market

In partnership with Redwood Logistics, FreightWaves researchers have detailed the findings of a survey asking shippers of all sizes to gauge how the pandemic has altered their expectations around shipping costs, their retail versus e-commerce business mix, sales growth and outlook for the future. The results of the study were published as part of a white paper, Volatility in Food Shipping.

As coronavirus cases began to soar nationwide in March, food shippers were some of the first in the transportation industry to be affected by the pandemic as demand for consumer packaged goods (CPG), beverages and food of all varieties skyrocketed. This sparked a sense of urgency among consumers to stockpile food and paper goods, resulting in grocery stores employing quotas to combat depleting volumes. Panic buying, quarantine measures and supply chain disruptions due to the virus’ spread cumulatively spurred wild demand swings.

FreightWaves’ Outbound Tender Volume Index (OTVI) recorded a 30% rise in truckload tender requests in just a matter of weeks. But the panic-buying spree didn’t last too long; within three weeks of OTVI nearly touching 13,000, it fell to 8,500 before gradually returning to normal levels. Shippers especially felt the heat from refrigerated carriers as rejections for contracted reefer tenders reached nearly 30% in late March, forcing many food shippers to settle for higher spot prices during this period.

However, the roller-coaster rise and fall in demand became the least of everyone’s concerns as the virus’ threat materialized when more than a dozen meat processing plants and packaged food companies reported workplace coronavirus outbreaks. The Tyson Fresh Meat factory in Waterloo, Iowa, shut down after 180 workers contracted COVID-19, resulting in the death of an employee. According to FreightWaves, the closure of the factory took away 4% of the nation’s pork production.

Although the rush to stockpile grocery items has since subsided, volumes remain strong as restaurants begin to reopen and restrictions are eased. But how long will demand stay strong? And what are the market trends heading into next year?

According to FreightWaves’ survey, most shippers believe that the surge in e-commerce sales is here to stay. The white paper reports that retail spending has been increasing 73% year-over-year (y/y) since March despite restaurants and brick-and-mortar stores gradually reopening. Shippers also expect higher shipping costs going into 2021 if demand remains lofty.

With OTVI currently up 25% y/y, prolonged elevated spot rates could result in tougher contract negotiations. Although FreightWaves analysts expect demand to taper off to an extent, they do suggest shippers prepare themselves for a scenario in which rates are pushed up into the next cycle.

The rest of the market review, outlook and food shipper survey analysis can be found in the  FreightWaves and Redwood Logistics white paper. Click here to view the rest of the findings.

Tags

Jack Glenn

Jack Glenn is an Editorial Associate for FreightWaves and lives in Chattanooga, TN. He is a recent graduate of the University of Georgia Terry College of Business where he earned a degree in Marketing.
Close