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Imports will continue to drive strong trucking volumes through September

Photo: Jim Allen - FreightWaves

Chart of the Week:  Ocean TEU Volume Index SONAR: App with special permissioned access

According to the FreightWaves Ocean TEU Volume Index, bookings of U.S. imports from China are up 89% year-over-year (y/y) through next week, which is a good indication that freight volumes will continue to flow through the rest of September. 

FreightWaves’ Greg Miller reported ocean shipping rates broke records, with 40-foot container rates eclipsing $3,700 in the spot market from China to the U.S. West Coast last week. 

During the early days of the coronavirus pandemic, many ocean shipping companies reduced their capacity. Trans-Pacific carriers are now returning their services to full strength and increasing rates in response to new shipper demand. This trend bodes well for domestic freight carriers. 

With the U.S. industrial sector slowly reemerging from the pandemic, the domestic freight market has been driven by a strong flow of imports from Asia over the past few months. 

China remains the nation’s largest maritime import market by a wide margin, although there was a slight reversal in this activity during 2019 due to trade tensions between the two countries.

Most containerized freight coming from northern Asia still enters the U.S. through the southern California ports of Los Angeles and Long Beach, maintaining their status as the largest port complex in the country.

Spot rates and tender rejections have been on the rise out of Southern California since late April. Chart: SONAR – TSTOPVRPM.LAXDAL, OTRI.LAX

With Los Angeles remaining the largest recipient of trans-Pacific cargoes, southern California has become one of the tightest truck markets in the country. 

All-in dry-van spot rates in the highly liquid Los Angeles-to-Dallas lane have climbed steadily from $1.12/mile in April to $3.04/mile by the first week of September, according to FreightWaves Outbound Tender Rejection Index (OTRI) showed an increase from 1.2% to 27% over the same period. 

Other parts of the country are also experiencing tightening truck capacity. Spot rates from another benchmark lane, Chicago-to-Atlanta, have jumped from $2.14/mile to $2.93/mile over the past month, with tender rejection rates for Chicago climbing from 13.6% to 20% during the same period. 

Unlike 2019, where many imports entered the country and sat in warehouses, this freight is moving throughout the U.S. as demand for certain products has jumped due to consumer lifestyle changes.  

Electronic and household goods continue to experience double-digit growth as Americans spend more time at home due to COVID-19. Athleisure has replaced business casual on the apparel front. These pandemic-induced consumer trends will continue to shake up U.S. importer inventories in the months ahead.

The bookings illustrated in the Ocean TEU Volume Index are orders that have expected departure dates over the next seven days. For shipments to the U.S. West Coast there will be a two- to three-week transit time before it hits the ports. This means that freight will not be on a truck until late September earliest. The index has shown consistent year-over-year  growth during the past few weeks, meaning that the flow of freight will not stop from the international side.

Special Note: The Ocean TEU Volume Index is an app inside of SONAR that users must request. A newer version expanding the detail of this app is set to be released at the upcoming Global Tech Trade Conference hosted by FreightWaves next week. Register here.

About the Chart of the Week

The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on for future reference.

SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time.

The FreightWaves data science and product teams are releasing new data sets each week and enhancing the client experience.

To request a SONAR demo, click here.

Zach Strickland, FW Market Expert & Market Analyst

Zach Strickland, the “Sultan of SONAR,” curates the weekly market update. Zach is also one of FreightWaves’ Market Experts. With a degree in Finance, Strickland spent the early part of his career in banking before transitioning to transportation in various roles and segments, such as truckload and LTL. He has over 13 years of transportation experience, specializing in data, pricing, and analytics.