Truckload Update: Recap of March Shipping Activity

March’s freight performance exceeded expectations with a significant bounce-back from February’s slowdown. With last month’s polar vortex in the rearview mirror and inventory levels, and consumer demand in the green, the industry outlook remains positive.

Here's what we will cover in this month's truckload update:

March Truckload Activity

Capacity Performance

Freight Rates

Class 8 Truck Orders

Manufacturing Performance

March Truckload Activity

March’s shipping volume drastically improved from the brief stall in February as key transportation states like Texas came back online following the polar vortex that shook the southwest and southeast regions.

According to Cass’s March Transportation Index, volumes rose 5.8% month over month from February to March and 10% year over year. Taking into account the seasonal adjustment during Q2, volumes were still up 3.4% MoM.

FreightWaves Outbound Tender Volume Index (OTVI) told a similar story, with OTVI staying above 15,000 for March, the first time since October 2020. With another strong consumer spending month, aided by a round of additional stimulus checks, demand continued to be a contributing factor to the uptick in shipments. 

The sustained port activity also played a role in March’s recovery. US imports remained consistent all month as shippers continue to stockpile products to combat low inventory as eCommerce orders do not appear to be slowing down.

Capacity Performance

March also proved to be another tight month for capacity as heightened consumer demand and shipment backlogs from “Frozen February” made it difficult for shippers to procure coverage. Referencing FreightWave’s Outbound Tender Rejection Index (OTRI), carrier rejections held steady at 25% or higher for the entire month, the first time recorded at that mark.

DAT’s load to truck ratio (LTT) for March further emphasized the capacity deficit with LTT clocking in just shy of 6:1 for the month. LTT did peak the first of March as shortages occurred across almost every market due to the frozen backdrop of the country. 

Freight Rates

Inflated freight rates were yet again the focal theme to round out Q1. With massive snowfall and ice accumulation in mid to late February, shutdowns in rail service across multiple terminals created a backlog of freight that sent rates soaring well into March.

According to DAT, Van spot rates climbed 10.4% over March and increased almost 42% YoY. Dry van rate per mile (RPM) finished at $2.65 per mile, the highest for 2021. Reefer and flatbed rates were highest on record for 2021 as well, with reefer shipments reaching peaks not seen in nearly three years. 

Class 8 Truck Orders

According to ACT Research, March’s class 8 truck orders were slightly down MoM with 40,800 trucks ordered. Even with the slight decline, March marked the sixth consecutive month of 40,000+ class 8 orders.

Semiconductor shortages still pose production issues for manufacturers, which could push delivery of these orders well into next year.

Manufacturing Performance

According to the Manufacturing ISM report, March manufacturing showed strong performance as growth reached 64.7%, a 3.9% MoM increase from February.

With new orders at 68% and customer inventories at the lowest levels ever recorded at 29.9%, we can see the imbalance of supply and demand in the freight market. Overall, March’s performance was highly encouraging and correlated to 6.2% GDP growth. However, inflation conversations remain top of mind as prices remain high at over 80% and have expanded for ten consecutive months. 

What can you expect moving forward?

All seasonal trends point to a decline in spot rates and some slight loosening of capacity. This is relative to the recent market and will still leave routing guides broken, especially in Texas, where volumes are exploding as the shift to the state opening for business is leading to increased volumes and decreased capacity. The same can be said in the southeast, giving early returns that are well ahead of the typical produce market seasonality. So, we may be talking about a market declining from a 10 to an 8-8.5. The first week of May is sure to impact the industry as DOT week 2021 will immediately press capacity and possibly send the market into another volatility spin before reaching Memorial Day.

Do you have freight needs? Reach out to Redwood to speak to a freight specialist today.