The national tender rejection rate ticked upward slightly today as carriers begin preparing for the Christmas holiday by positioning their drivers closer to their domiciles. In the lead up to major holidays, driver preferences for origin/destination firm up, leading carriers to be choosier and making it more difficult for brokers to cover loads.
Still, there’s a lot of money to be made immediately prior to Christmas, especially by transportation providers who can offer expedited services. Carriers will have to balance their desire to seek revenue before an expected sharp Q1 drop-off and their need to keep drivers happy in a low-unemployment economy and freight environment that is still structurally constrained by a shortage of drivers.
Did you know?
Of drivers surveyed by Kenco and CarrierLists , 44.4% say having a breakroom open to drivers and offering snacks, coffee or water, free WiFi and bathrooms is most important to them while 22.3% think more understanding of mistakes and tardiness is most important. Sixty-one percent of respondents believe warehouses can be better partners in the process by becoming more efficient in loading and unloading.
“We don’t see [Amazon] as a peer competition at this point.”
-Frederick W. Smith, FedEx Chairman and CEO
In other news:
What’s behind the crash in crude?
Oil prices crashed to new one-year lows on Tuesday, dragged down by a deepening sense of global economic gloom as well as fears of oversupply in the oil market itself. (oilprice.com)
FedEx slashes profit forecast over global economy concerns, rather than Amazon
FedEx has slashed its profit forecast amid fears for the global economy, but denied analysts’ claims that Amazon is becoming too strong a competitor. The company announced that its second quarter adjusted non-GAAP results saw net income of $1.08bn on the back of revenues of $17.8bn. (The LoadStar)
Elon Musk unveils his first Los Angeles-area tunnel
Billionaire entrepreneur Elon Musk made a brief public appearance late on Tuesday to unveil the first tunnel completed by the underground transit venture he launched two years ago as an ambitious remedy to Los Angeles’ infamously heavy traffic. (Reuters)
Fight brews in Houston’s port over energy exports
U.S. energy exporters are wrangling with one of the country’s busiest ports in Houston, saying its recent move to accept larger container ships threatens to constrict the shale boom. (Wall Street Journal)
Fed seen making dovish hike with 2019 pause: decision day guide
U.S. central bankers meeting in Washington are expected to raise interest rates a fourth time this year, brushing aside pressure from President Donald Trump, while signaling a slower approach to their gradual rate hike campaign in 2019. (Bloomberg)
It seems that uncertainty is everywhere, no matter the market: American equities investors keep switching back and forth between risk-on and risk-off strategies; oil traders worry about global growth next year; and transportation industry observers have had a devil of a time understanding freight patterns this year, never mind what’s going to happen next year.
Looking back at 2018, it’s clear that external factors distorted normal seasonal patterns. The ELD mandate and an unexpectedly strong economy made the first quarter of 2018 much tighter than previous years. Tariffs imposed on Chinese imports broke the peak summer/fall surge in two, as we wrote. When we look to 2019, the few things we can be sure of include the driver shortage, evolving supply chain demands, and e-commerce’s increasing share of retail. Those three factors, in our view, will keep freight markets sensitive to any further demand or supply-side shocks. Aggressive contract rate increases tamped down some of the spot market’s turbulence as 2018 progressed, but expect volatility to return at some point next year.