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Spring Awakening in the Supply Chain: 4 Rate Indicators to Watch

Estimated reading time: 2 minutes

Spot truckload volumes and rates are beginning to rise as spring approaches. Last year was a banner year for truckload pricing, with spot and contract rates increasing by double digits all over the country. That and the uncertainty that comes with an evolving transportation marketplace has some shippers concerned. While rate increases always depend on overall economic growth, and the interplay between supply and demand, understanding four specific areas that reflect springtime shipping patterns in the U.S. can help you gauge where capacity and rates are heading.

Shipments Spring Forward

While U.S. economic growth is forecasted to continue at a slower pace this year, shipping demand is already growing for spring, exceeding available capacity in dry vans, flatbeds, and reefers. The pace is indeed slower than it was in 2018. However, whenever there are more loads posted than trucks available, rates will rise. These four indicators can help you understand why rates are increasing now:

  1.  Chinese New Year Has Ended. Now that the Chinese New Year celebrations are over and production has resumed, outbound volumes from the West Coast, especially Seattle, are building. During the last week of February, pricing for the Seattle-to-Los Angeles lane jumped by 14¢ to $1.35 per mile. Stockton and Los Angeles port volumes are up too, with increases from 10¢ to 17¢ per mile (DAT). 
  1. Construction Season is Starting. The building season has begun. Flatbed load posts increased by 7 percent at the end of February, and truck posts dropped 5 percent. This inverse relationship is a clear sign that construction activity is picking up (Fleet Owner).
  1. Produce Season is Here. Refrigerated rates and volumes have been lower than normal, but spring produce season has begun and arriving harvests will quickly squeeze capacity. This year’s produce volumes appear to be larger than the last. Fresh fruit imports for 2019 are projected to reach $13B, an increase of $600M over 2018 levels. Imports of fresh vegetables are estimated at $8B, which is slightly higher than last year’s totals. Harvest schedules have traditionally shaped shipping patterns from year to year. Because the trend of sourcing produce locally is growing nationally, geographic shipping volumes and capacity shifts could also be on their way (CCJ).
  1. Easter is Right Around the Corner. Shipment volumes tend to rise leading up to the Easter holiday as consumer spending increases on items like candy, baskets, eggs, ham, and decorations. In 2018, consumers spent $5.7 billion on Easter food alone. This additional surge furthers the need for capacity in an already tight market.

Spring into Action with Capstone

A spring surge is a given each year but the issues that crop up are constantly changing. A 3PL partner with experience, analytical tools, and a strong carrier network can help you manage capacity issues during produce season while keeping costs under control. Contact us to learn how.