Just like the weather, rates keep changing

Rainy weather can affect people's moods and therefore their shopping habits. That is one explanation for why the recent bout of weather in the Northeast has resulted in lower shipping volumes in the region.

Rainy weather can affect people's moods and therefore their shopping habits. That is one explanation for why the recent bout of weather in the Northeast has resulted in lower shipping volumes in the region.

A wet May in the Northeast is an example of how weather is impacting rates and volumes

Spot market rates have continued their usual pattern of volatility in recent weeks, and one reason has been the current weather patterns, particularly in the Northeast. Weather, as it also turns out, can be a good predictor of future freight volumes.

The Northeast has seen an unusually cool and wet May, and that will likely continue, reports Jon Davis, meteorology team lead for Riskpulse.

“The middle to end of April was a warmer than normal period in the Northeast,” Davis says. “This changed dramatically during May as temperatures have been below normal virtually the entire month with the coolest conditions from May 7 to May 14. These departures over this large of an area are very significant and highly anomalous.”

Rainfall over the region was also significant in May, and when combined with a wet winter that has helped alleviate near-drought conditions in some parts of the region.

Weather graphic

“For reference, normal rainfall during this 2-week period is around 2 to 2.25 inches in this area,” Davis notes. “So, anything above 3 inches is well above normal. Most of the areas within the I-95 corridor have had 3-plus inches during the past 2 weeks.”

That weather pattern has affected freight moving into and out of the Northeast.

“Part of the freight story last week appears to be lighter volumes due to lack of demand in the Northeast quadrant due to chilly, damp conditions,” Mark Montague, analyst with DAT Solutions, tells FreightWaves. “Further West, freight movements remain robust from California, Texas and other sunbelt states.”

In this week’s DAT Trendlines spot rate reports, as an example, a refrigerated lane from Elizabeth, NJ, to Boston was up 23 cents per mile to $3.58/mile. Nationally, refrigerated rates are at a 4-month high at $1.99 per mile for the week ending May 13. Part of that is due to a ramp up of produce season in California.

Outbound rates in Fresno, CA, and Los Angeles both shot up 12 cents to $2.14 per mile and $2.57 per mile.

“Nationally, the number of available refrigerated loads declined 1% while truck posts increased 5%,” DAT reports. “On the top 72 lanes for spot reefer freight, 51 lanes had higher rates last week—despite uneven production out of Florida, shipping gaps in California, and a drop in volumes in markets near the Mexican border.”

The same was true of van lanes in the Northeast. Philadelphia to Boston climbed 16 cents to $3.18 per mile while Atlanta to Charlotte jumped 23 centers to $2.40 per mile. Just a week ago, outbound van rates in the Northeast were trending downward, DAT’s Matt Sullivan wrote.

On a national basis, van rates this week are being affected by declines in the length of haul as railroads and intermodal providers ramp up rate pressures.

“The biggest van rate declines last week were on long-haul lanes,” DAT says. “Intermodal companies have also been competing for market share lately with aggressive pricing, which has pushed truckload rates lower on longer lanes that compete with rail.”

Davis says that the immediate forecast, following the current hot spell, is for more cool temperatures and wet conditions for the Northeast region.

“In the Northeast, the next 5 days will be warmer than normal before temps cool down to normal levels during the 6-10 day period and go a bit below normal during the 11-15 day time-frame,” he says. “So, the only period of warm weather during May in the Northeast will be the current 5-day stretch. As temps cool, the pattern will also turn wetter next week and thru the Memorial Day Holiday weekend.”

That could lead to more volatility in Northeast rates and volumes over the next few weeks.

Warmer temps, more consumer buying

Several studies have been conducted to test the relationship between weather and consumer purchases, which drive freight volumes. For instance, it’s probably pretty obvious to see that when the temperatures drop, consumers buy more warm-weather clothing. Obviously, in the heat of the summer, more swimsuits and other light clothing are purchased.

But, it goes further than that. The weather can affect people’s moods, according to several studies.

“A three-part study reported on by Psychology Today found that people feel more positive when the sun is out. That might not be surprising to anyone who’s enjoyed a long walk with a friend on a sunny day. However, those sunny feelings also prompt people to want to shop — and spend — more,” Go Banking Rates wrote in a blog post

“Perhaps unsurprisingly, demand for hamburgers and coleslaw rises dramatically when temperatures near 70 degrees and people spark up their grills,” the site notes. “When winter strikes, people tend to shop instead for comfort foods. Google searches for pork chops, meatballs, lasagna and chocolate chip cookies soar when the weather turns cold or blizzards strike, according to The Washington Post.”

According to Ad Age, during periods of unseasonable weather, such has been occurring in the Northeast in recent weeks, shoppers tend to stay home. And that lowers demands for goods and alters freight patterns.

“As the weather improves in the East that should bring a strong end to the month of May,” Montague surmises.