New year, same trends — freight demand is unlikely to taper in the first half of 2022.
In its “State of the Industry” report for January, FreightWaves recaps Q4 and highlights the trends that are likely to have an impact in the first half of this year. Presented in affiliation with Ryder System Inc., the report dives into the trucking, intermodal and ocean markets and features FreightWaves SONAR data, highlighting key industry metrics to paint a clearer picture of the changing market.
Current analysis shows that truckload rates are near record highs and facing upward pressure as capacity continues to tighten. Things weren’t as busy this peak season, but it definitely wasn’t a lull. Ryder reports that tender volumes finished the year nearly 50% higher than 2019 totals.
Kevin Clonch, group director of customer logistics at Ryder, notes that there wasn’t a true peak last year, as it spiked early, remaining elevated into the new year.
“When you look at 2021 volumes compared to 2019, even though your traditional peak season didn’t occur [last year], we still saw about 50% more volume in the same period as two years prior, which is a pretty significant spike, and it’s further exacerbated by the continued driver shortage,” Clonch said.
Tender rejection rates in 2021 climbed to 21.1% but were actually nearly 700 basis points below 2020 levels. The average dry van spot rate was $3.44 per mile, up 51 cents year-over-year (y/y), representing an 18% increase. Contract rates and intermodal contract rates are likely to climb higher in 2022.
Clonch doesn’t anticipate rates falling off anytime soon, suggesting current conditions are the new normal.
The same goes for ocean spot rates, which are prohibitively expensive. December spot rates from China to the North American west coast sat at $14,923.62 per forty-foot equivalent unit, a more than 250% increase from the beginning of last year. However, shipping to the East Coast was even more expensive, as the Freightos Baltic Daily Index sat at $17,194.58 per FEU, an increase of 218% YTD in December.
Unprecedented demand amid capacity tightness has raised the rates and contributed to massive congestion at the Ports of Los Angeles and Long Beach, the nation’s largest container ports. The pileup of import shipments has been commonplace as peak-like conditions have persisted since August 2020 with little relief.
It’s been interesting to see how secondary ports like Houston, Seattle, Charleston, South Carolina, and Norfolk, Virginia, have gained market share at the expense of the bigger ports.
That said, it appears that market tightness and elevated demand will continue into this year as well.
“It’s certainly been a disruptive last couple years. When I look at what Ryder’s been able to do, it’s been our nimbleness and agility in being market experts and being able to provide end-to-end solutions for our customers that have set us apart,” Clonch said of Ryder’s freight brokerage services. “We’re going to continue to focus heavily in the truckload space and continue to expand our LTL spend with our strategic LTL providers. This will allow us to keep building customized solutions to solve our customers’ freight issues and be an extension of their supply chain.”