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Freight market updates: Here’s the latest news for Q3

08.03.2021 | By Casey Bright | 4 min. read

Reports of increased retail spending, tight transit capacity, congested rail terminals, and elevated contracted rates are at the forefront of this month’s insights

Summer is in full swing, the first half of the year is done, and we’re moving full speed into the second month of Q3.

Key points for shippers:

  • Back-to-school spending is expected to increase 9% year over year in 2021. 
  • Strained capacity will continue across all transportation modes throughout the rest of the summer.
  • Intermodal service is suffering due to congestion at rail terminals.
  • Spot rates are pushing contracted rates progressively higher, which should gradually improve contracted rate compliance.

Increased back-to-school spending will heighten pressure on already-tight shipping capacity

Back-to-school retail spending is expected to increase by 9% this year, according to a survey by KPMG. Thanks in part to advance child tax credit payments that began mid-July — as well as overall increases in year-over-year retail sales — shoppers plan to spend $268 per child in 2021 (compared to $247 per student in 2020). 

How will they be making these purchases? According to KPMG, significantly more shoppers plan to purchase school supplies at brick-and-mortar stores than via e-retailers, compared to last year. While this signals a return to traditional retail sales in the short term, in-store shopping rates still trail far behind pre-pandemic norms. 

Nonetheless,  more and more shoppers are returning to retailers for pencils, backpacks, and binders — and shippers must race to accommodate demand. 

Here’s what this means for shippers:

  • Consumer demand for goods remains high, and increased back-to-school spending promises to turn up the heat, so expect transportation costs to remain elevated throughout the summer.
  • As in-person retailers hustle to stock and replace inventory, strained capacity will persist for all modes of transportation (including air freight, ocean freight, and road freight) through the end of the season.

 Here’s what you can do:

  • If you’re shipping partials or less-than truckload (LTL) freight during back-to-school season, take advantage of the shared truckload (STL) service that Flock Freight® offers, FlockDirect™️.  FlockDirect enables several shippers to share deck space in one trailer and leverage service from our network of truckload carriers, rather than consolidators and LTL providers. The result of moving your shipments via FlockDirect? Better service performance, cost savings, and full control over pickup and delivery dates — regardless of capacity.

Rail terminal congestion is putting historically “reliable” intermodal shipping on shaky footing 

Intermodal service in North America is taking a hit due to severe congestion at rail terminals. Railroad companies are suspending or metering volume movement on lanes like Los Angeles to Chicago in an effort to unclog hard-hit ports. At the same time, intermodal carrier rejection rates have peaked as pricing has soared — but low service levels fail to justify the price increases for shippers. 

Here’s what this means for shippers:

  • There is no end in sight to the difficulties facing intermodal service, which won’t improve until congestion clears at rail terminals.
  • Shippers must consider other shipping options, as intermodal transportation will no longer be the accessible, low-cost option it has been historically.

Here’s what you can do:

  • Continue to use shared truckload or truckload as your mode of choice for service-critical shipments.
  • Make Flock Freight your go-to logistics provider and use shared truckload service for larger partial orders you might otherwise ship by truckload. With STL, you’ll cut costs by only paying for the space you need. Better yet, with fewer truck drivers on the road, you’ll cut down on the carbon emissions associated with moving freight.

Shippers will encounter elevated pricing as contracted rates drive upward

Spot rates in the trucking market are pushing contracted rates progressively higher, a trend that will inevitably improve contracted rate compliance. 

Carriers have been securing higher rates in the contract market, which, to no surprise, has reduced the incentive to fixate on the spot market. As a result, more and more shipments have begun to mobilize towards the contract market. 

Here’s what this means for shippers:

  • As contracted rates continue to rise, tender rejection rates will decrease and compliance in routing guides will improve.
  • This increase will create a trade-off between cost and efficiency: As service improves, shippers will face escalated prices. 

Here’s what you can do:

  • Adjust your request for proposal (RFP) process to lower costs. If you typically submit RFPs for truckload or less-than truckload shipping, you might be overpaying for volume LTL service or deck space you don’t need.
  • The fix: Optimize trailer space and boost the profitability of your supply chain by adding FlockDirect to your RFP process. You can take advantage of our straightforward shared truckload pricing for partial orders in addition to a seamless, eco-friendly delivery process.

That’s a wrap on this month’s market insights. Truckers, shippers, tune in next month for the latest news in freight. Stay up to date on Flock Freight by opting into our newsletter above. 

Until then, streamline your supply chain, secure capacity, and dodge high contracted rates with FlockDirect.

Chance Jones, our Senior Pricing Analyst at Flock Freight, leverages 12 years of freight industry experience and simplifies market conditions to help you navigate the ebbs and flows of pricing, capacity, and service.

Overcome elevated costs, strained capacity, and low-quality service with Flock Freight’s shared truckload solution.