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Weekly Market Update: Reefer volatility keeps the freight market interesting

Reefer volumes are averaging roughly 6% higher this week versus last as produce movements are increasing again. Many of the harvests were delayed in California this year as a wetter than average spring has made harvests difficult. National reefer rejection rates have been steadily increasing  since the beginning of June, moving from 10% on May 31 to 14.6% on June 19, the highest level they have been since late March when the market was still recovering from 2018 volatility. The rest of the for-hire truckload market has been relatively quiet as volumes continue to slide below 2018 levels.

Reefer rejection rates are climbing steadily in June. (SONAR: Reefer Tender Rejection Index – USA)

FreightWaves proprietary Outbound Tender Volume Index (OTVI) was showing signs of recovering after what was a very disappointing May, started to move the other direction this week with volumes falling over 5% below last year after averaging just under 2% lower in the previous week. On June 19 last year, volumes started increasing in earnest after holding relatively flat, this year the exact opposite is occurring with the OTVI falling 1.36%.

Freight volumes missed hard in May, but were recovering slowly until this week. (SONAR: Outbound Tender Volume Index – USA)

The drop in volumes is yet another sign that the dry van market is still in decline and much weaker than it was last year with agricultural movements and temperature controlled freight demand propping up the general freight market.

Other than rejection rates and volumes on the reefer side, the USDA reported full truckload rates for hauling produce increasing in multiple lanes out of California. Rates from northern California to larger metro areas were 2.5% to 5.7% higher this week compared to last, reversing a trend of decline that has been occurring since early May. The largest week-over-week jump was in the Fresno to Dallas lane where average rates jumped from $3,700 to $3,912, a 5.7% climb.

Likewise, the southern California area also recorded higher rates this week with similar percentages. The Los Angeles to Chicago lane increased 4.3%, from $4,600 to $4,800 on average.It should be noted, these values are well below last year. Fresno to Dallas was 21% higher at this time last year and L.A. to Chicago was almost 28% above its current value.  

Not all of the activity is originating from California, FreightWaves cross border freight market reporter, Noi Mahoney, reported on what impact the delayed Mexican grape harvest is having on border town capacity, specifically in Nogales.  

A big factor in declining general freight volumes on the dry van side is weakening volumes in some of the larger markets. The Atlanta market, the nation’s second largest outbound market, is averaging over 23% less outbound volume this year versus 2018. This is the largest year-over-year discrepancy among the top ten markets.

The Ontario market, the nation’s largest,  which had been averaging volumes over 40% higher in May, has receded to only an 11% YoY increase. Joliet, IL, Harrisburg, PA, and Dallas TX are all 9%-15% down.   

Some of the emerging markets that are up this year are in the port cities where there is still a decent amount of activity. The Elizabeth, NJ market where the port of New York and New Jersey operates is showing a 44% YoY increase in outbound volumes this year. The port markets of Savannah and Norfolk are showing 15% and 20% increases respectively.

The port areas and agricultural shippers are driving the freight market activity presently, but produce season will close in the coming weeks for the major producers which will probably take any volatility with it.

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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 a 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.

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