In trucking, the model of the trade war era is re-emerging

Freight traffic is moving shorter distances, which exacerbates the effects of declining demand

Diagram of the week: Long-distance tender volume index, short-term tender volume index, urban transport tender volume index – USA SANAR: LOTVI.USA, TOTVI.USA, SOTVI.USA, COTVI.USA

Demand for long-distance trucking has declined faster than freight moving in less than half a day, exacerbating the weakening process in the market. From March 1, the long-distance outbound tender index (LOTVI), which measures tender requests for goods moving more than 800 miles, decreased by 19%, while the city’s outbound tender volume index (COTVI) ) – tenders for goods moving less. than 100 miles – fell by only 8%.

Looking back on 2019 – a year that was considered extremely difficult for trucking – the market showed a similar picture. Total demand did not decrease significantly, but in the total volume of short-distance cargo accounted for a larger share. From mid-January to mid-May 2019, the demand for short-distance transportation increased by ~ 10%, and for long-distance – by ~ 4%.

One of the main drivers of this shift was the trade war with China. Shippers imported goods earlier this year to avoid potential tariff increases. This filled warehouses around ports and led to shuffling of goods upstream from performance centers and shop windows in major settlements on the east coast. With the accumulation of stocks, shippers returned to the business of moving goods between higher warehouses.

A load that moves less than half a day from the starting point does not reduce throughput just like a load over 800 miles. Freight flows are naturally unbalanced in the US, and most markets are focused on either consumption or production.

The FreightWaves Headhaul Index (HAUL) measures the balance of demand for outbound and inbound loads. If the initial demand exceeds the incoming one, the market has a natural shortage. These markets are represented by blue on the map, and red markets indicate the state of oversupply.

Drivers can only drive 11 hours a day due to regulatory requirements set by the FMCSA. This averages 450 to 550 miles per day.

If the cargo moves less than 250 miles, carriers can return to the shipping center the same day and be available for shipment the next morning with only a short-term reduction in load capacity. Carriers can cover multiple loads of 100 miles or less per day, if available. One load over 800 miles affects the capacity of about three loads over short distances, but ignores the aspect of load balance.

The freight market is in a period of transition to a much softer environment – not only because demand is falling, but also the type of demand is lowering it faster. Net volumes are an insufficient indicator of demand for road transport.

About the schedule of the week

The FreightWaves chart of the week is a selection of charts SANAR which provides interesting data to describe the state of freight markets. The chart is selected from thousands of potential charts SANAR to help participants visualize the freight market in real time. Each week a market expert will post a chart along with live comments on the first page. The Chart of the Week will then be archived on FreightWaves.com for further use.

SONAR combines data from hundreds of sources, presenting data in charts and maps and commenting on what freight market experts want to know about the industry in real time.

The FreightWaves data and product science team releases new datasets each week and improves customer usage.

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