• DATVF.VWU
    1.570
    0.029
    1.9%
  • DATVF.LAXDAL
    1.584
    0.040
    2.6%
  • DATVF.DALLAX
    0.864
    0.024
    2.9%
  • DATVF.PHLCHI
    0.948
    0.025
    2.7%
  • DATVF.LAXSEA
    2.030
    -0.025
    -1.2%
  • DATVF.SEALAX
    1.110
    0.084
    8.2%
  • DATVF.VEU
    1.507
    0.019
    1.3%
  • DATVF.ATLPHL
    1.642
    0.002
    0.1%
  • DATVF.VSU
    1.224
    0.032
    2.7%
  • DATVF.CHIATL
    1.932
    0.031
    1.6%
  • DATVF.VNU
    1.434
    0.027
    1.9%
  • ITVI.USA
    9,884.260
    76.830
    0.8%
  • OTRI.USA
    6.160
    0.460
    8.1%
  • OTVI.USA
    9,876.200
    74.110
    0.8%
  • TLT.USA
    2.570
    0.000
    0%
  • WAIT.USA
    150.000
    0.000
    0%
  • DATVF.VWU
    1.570
    0.029
    1.9%
  • DATVF.LAXDAL
    1.584
    0.040
    2.6%
  • DATVF.DALLAX
    0.864
    0.024
    2.9%
  • DATVF.PHLCHI
    0.948
    0.025
    2.7%
  • DATVF.LAXSEA
    2.030
    -0.025
    -1.2%
  • DATVF.SEALAX
    1.110
    0.084
    8.2%
  • DATVF.VEU
    1.507
    0.019
    1.3%
  • DATVF.ATLPHL
    1.642
    0.002
    0.1%
  • DATVF.VSU
    1.224
    0.032
    2.7%
  • DATVF.CHIATL
    1.932
    0.031
    1.6%
  • DATVF.VNU
    1.434
    0.027
    1.9%
  • ITVI.USA
    9,884.260
    76.830
    0.8%
  • OTRI.USA
    6.160
    0.460
    8.1%
  • OTVI.USA
    9,876.200
    74.110
    0.8%
  • TLT.USA
    2.570
    0.000
    0%
  • WAIT.USA
    150.000
    0.000
    0%
Chart of the WeekMarket Insight

Reefer volumes trick while dry van treats

Chart of the Week: Reefer Outbound Tender Volume Index, Dry Van Tender Volume Index – USA SONAR: ROTVI.USA, VOTVI.USA

It’s Halloween week, and that means tens of thousands of pounds of candy have been moving across the country into grocery stores and various retailers in an attempt to raise the children’s (and parent’s) blood sugar levels. What you may not know is that candy is primarily transported in temperature-controlled or ‘reefer’ ⁠— slang for refrigerated ⁠— trailers. What may come as a surprise is the fact reefer load volumes have dropped 5% versus this time last year and have been averaging over 5% lower than 2018 volumes since April according to FreightWaves Reefer Outbound Tender Volume Index, while dry van volumes are up 3%, signaling a trickier Halloween for reefer carriers.  

Reefer trailers are utilized for shipping commodities that need to have some level of environmental control, either from heat or cold. Most of the demand arises from food products such as produce, candy, and beer. There are instances, however, where shippers will opt to ship on dry van where the cost is lower when they think the weather will cooperate.  This is a calculated risk, but reefer carriers are in shorter supply than their van counterparts, and their prices can be much higher ⁠— especially in the various produce seasons.

Overall freight volumes have been averaging 3%-5% higher YoY since late July, but reefer volumes have been consistently underperforming, at least on the contracted side. The spot market, where shippers go to find carriers when capacity is unavailable or to find occasional discounts when capacity is loose, has been much softer in terms of price versus 2018. As of October 16, the DAT Dry Van Long Haul Freight Rate Index was roughly 12% lower than the same day last year. The index measures average spot rates excluding fuel and other assessorial charges in longer haul lanes in the U.S.

The declining price of dry van loads has contributed to the declining reefer volumes by placing a downward pressure on prices in entire truckload market. Reefer volumes occupy roughly 15% – 20% of truckload freight moving in the U.S. Van dominates the capacity averaging around 70% with flatbed and tankers making up the rest.

When van capacity increases, shippers are enticed to take the cheaper rate, especially as carriers become more desperate for freight to fill their trucks. Some commodities are not as sensitive to temperature variation, but it is not necessarily best practice. For example, van carriers will move freight overnight when temperatures are cooler and more stable for these commodities. Weather forecasts become extremely important when moving temperature sensitive freight without the system as well.

Shippers are taking a risk in these scenarios, as the retailers will fine them if the product is not in the promised condition, meaning the shippers will also be out at least some portion of the revenue for their shipment.

Combine the oversupplied dry van market with a declining food orders in 2019 and the reefer carriers may have had a more difficult run in 2019 than many dry van companies. According to the Census Bureau, non-durable goods orders for food, beverage, and tobacco have been softer than 2019, 1.3% lower this September versus last, part of a flattening to slightly down nine-month trend.

The trade war has hurt the sector as well, with less produce demand from China, but there were several weather events that hurt yields in late 2018 into early 2019. The good news is that this is more than likely a short-lived cycle as weather events and trade wars are temporary (hopefully) and food is still necessary for human survival. The oversupplied trucking market will more than likely take a bit longer to correct.

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 FreightWaves.com 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.

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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.

4 Comments

  1. Quote:
    “As of October 16, the DAT Dry Van Long Haul Freight Rate Index was roughly 12% lower than the same day last year. ”

    “The declining price of dry van loads has contributed to the declining reefer volumes by placing a downward pressure on prices in entire truckload market.”

    But , but , but , you guys et Al are reporting “strong consumer demand and strong consumer spending ” ???? So how can that be since freight demand is sluggish ???? LOL ! Obviously retail sales have declined !

    So let’s see :

    Quote:
    Wed, Oct 16 2019
    “US retail sales unexpectedly decline in a sign that consumer economy could be cracking” .

    Apparently that is precisely the case ! But if you listen to mainstream media ,Halloween candy demand is going to save the economy , LOL !

    Apparently consumer spending is the economy’s best hope ! If that’s the case , then I strongly recommend taking a hard look at CEO confidence . History indicates that this level of disparity between the two tends to be what occurs every time prior to the economy entering a recession . CEO confidence is a leading indicator . From my perspective it’s currently suggesting an upcoming increase in layoffs . As more “consumers” get laid off , “consumer confidence” will decrease along with their spending .

    Currently CEO Confidence has COLLAPSED !

    The trucking( Major Motor Carriers & their associations) industry keeps on complaining about to much capacity !

    It’s the economy , st*pid !

    Eventually when demand will pick up , they’ll go back to their “truck driver shortage” broken record .

    In my humble opinion ………

  2. I checked out : Haul-o-ween: Tricks, treats, and truckload freight on DAT .

    The great thing from my perspective in regards to the posted article on DAT is that they included a Halloween spending chart .

    Assuming that those figures are correct , Halloween spending will continue to drop from its high in 2017 to at least its low in 2015 IMHO . The projected low could potentially occur and print in 2021 appox. and potentially extend to 2022 , .

    In my opinion , retailers have access to the same numbers . Since their sales have been declining due to declining demand since the prior two years , they will highly likely order less Halloween goods . Keep in mind many retailers have remaining non perishable Halloween goods stored in inventory from the prior year due to not being sold due to a decrease in demand . The more inventory they have , the less they will reorder .

    Logically , if I were in the retail business and noticed that my Halloween sales declined in the prior year due to a slowing economy and peaked in 2017 , I wouldn’t be rushing to buy in excess . I would be ordering much less and especially since I would most likely have an increase in inventory due to having over ordered the prior year .

    I wouldn’t be counting on Halloween to be saving the economy , LOL !

    And this ain’t no “trick” nor will it be a “treat” if it pans out .

    In my humble opinion .

  3. Now check this out :

    Quote:
    “Hershey’s Price Increases Help Results

    Hershey Co. said Thursday that raising prices on its chocolate and other candy helped bolster its quarterly results, but retailers in North America, its most important market, bought fewer products as a result.”

    I don’t understand the ignoramus mentality of raising prices on junk while people are becoming more health conscious . These confectionary co’s should be doing the opposite . It’s mostly sugar and coca anyways . Those commodities can be traded to reduce costs .

    I don’t believe the reason for which retailers bought less is due to price . However , I do believe they bought less due to reasons I have stated in my prior comment apart from the general public making healthier choices . The economy is slowing down ………. Usually retailers will pass on that higher cost to consumers . However , if the economy is slowing down consumers will cut back as well . And raising prices while an economy is slowing down isn’t the wisest thing to do . You actually should be decreasing price on volume orders to increase your sales . You should focus on increasing demand, not price, for the product . More “volume” = more profit .

    Walmart didn’t become the biggest retailer in the world because they’re smarter than everyone else . The founder focused on increasing volume sales ! Lower price leads to an increase in demand ! It doesn’t take a genius to figure that out .

    The same for that dollar store they have in Canada . In fact , it did so well based on low price VOLUME sales that it got bought out by a private equity firm by the name of Bain Capital ! Then they began to increase prices to a point that slowed their growth . Since their last two quarters they appear to have reversed that slow down . we’ll see if it’ll persist .

    We’ll see what Mondelez International and Tootsie Roll Industries will have to say shortly .

    However , Nestle has been on the ball and sold its US confectionary business to Ferrero apparently due to Americans eating fewer sweets / Declining sales in “candies” . People are making wiser and healthier choices .

    Even fast food chains are not doing as well as they once did . Look at McDonalds . I don’t know what their CEO’s have been thinking with their changes . McD’s used to be “the restaurant ” to bring your children at for a “happy” experience . Not anymore ! By creating a joyful experience and habit at the child and youth stage , the habit STICKS into adulthood .

    If Disney would wake up and create a “Disney World” fast food chain that would cater to children with a healthy menu , no other fast food chain could compete with them , NONE ! Disney would have more impact and influence on any child to eat healthier than any child’s parents would ! Just make it taste good and entertain them a la Disney . The money would roll in beyond belief !

    In my humble opinion ……….

    10-4 !

    In my humble opinion ……….

  4. Quote:
    “Pig skin, dead wasps and bee vomit: what’s really in that candy?”

    LOL ! That just goes to show you , if it tastes good , looks good , and smells good, we’re willing to eat anything without questioning it . LOL !

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