This might be a good freight year if it weren’t for the historic levels of freight over the past two years and the rate of descent from those highs. The high levels and the period of time that the elevation lasted were significant factors in creating the intensity of the impact during this softening market.
The fact that this is the second-highest freight market in the past five years means nothing. It’s really just an interesting fact.
As the SONAR dashboard below shows, outbound tender volumes are at their second-highest level in five years.
Outbound tender rejections are higher than in both 2018 and 2019. But no one can find a load because there were 20,000 new authorities added to the system in one month.
Again, the relative rejection and capacity levels are meaningless. The context of the plateau we are dropping from is the catalyst for blood-letting.
This is the third-tightest market and the second-highest volume market in the past five years.
And, it sucks. Why?
The impact of the current cycle is determined by our reaction to the previous cycle.
- 20,000+ new authorities
- Investment in new equipment
- Over-ordering of inventory, resulting in canceled orders
- The Shanghai red light/green light game
- And much much more!
Then there is the “f” word…
Fuel.
Spot rates on the left of the SONAR chart above not only can’t keep pace, but they have also fallen off a cliff.
Meanwhile, contract rates, on the right, are up and stable. That’s good news for fleets as they can at least make some money with stable rates and a fuel surcharge table.
Note: Buying at wholesale doesn’t suck either.
Oh, and there’s the economy, which is slowing and descending faster and faster.
The SONAR charts below show slowing orders for capital goods and consumers beginning to regain their delinquency status with credit card companies.
All of these factors result in a less-than-stellar rebound in import TEUs from the latest shutdowns in China.
Ah, Fuel!
Read more articles from Michael “The Dude” Vincent
Peace and love.
