Spot rates and volumes for reefer and dry van rose modestly in May as shippers frontloaded cargo ahead of summer and further tariffs, according to DAT Freight & Analytics data.
A dry van volume index increased by 3% for May compared to April while reefer went up 5%, per DAT data released last week. Despite the increase, challenges could further hit transportation businesses because the uptick may not hold.
“Between Roadcheck, Memorial Day, and shippers adjusting imports due to tariffs, it was an uneven and challenging month for carriers, brokers, and shippers,” Ken Adamo, DAT chief of analytics and VP of strategy and business development, said in the release.
The kicker is that once goods make it to their destined warehouses, volumes are expected to decline. One reason is that peak season is happening now, generally speaking, rather than in September, Dean Croke, DAT iQ principal analyst, told Trucking Dive in an interview.
Typically, shippers bring imports so goods can land in the U.S. in September and be in warehouses by October. That way items are in stores for Christmas and holiday season shopping. But with tariff concerns, shippers have been importing volumes since last September, at a fairly high and elevated volume, Croke said.
That means the rest of the year is expected to be flat in terms of volumes, Croke said. That means shippers could continue to have pricing power, Croke said.
“So the rest of this year means, if demand remains flat and uncertain because of the trade war, shippers are essentially sheltering in place,” Croke said. Sheltering in place means shippers are afraid to invest, afraid to expand and afraid to add staff, he said.
If demand is flat, it is even more perilous for brokers and carriers that still have an oversupplied freight market, Croke said. “There's still too many trucks for loads, so that means that there's downward pressure on rates, margins get compressed, and you see everybody start to become really stressed for the rest of this year,” he added.
Stagnant volumes are worrying for Indiana-headquartered Circle Logistics, a freight broker covering America, Canada and Mexico.
But a stable, consistent flow of goods in the major shipping lanes could ease that discomfort, Karl Fillhouer, VP sales and operations at Circle Logistics, told Trucking Dive in an email.
The ongoing freight recession was expected to end by the end of June, but there’s no direction about where the market's going to go.
With an absent trade policy that people can trust, “I think we're going to see a very flat freight market and I fear that some carriers and brokers may not survive this market, because it's just not enough demand,” Croke said. “There's too much uncertainty.”
