Category: News, Logistics, 3PL, Transportation, Motor Freight

The Transportation Intermediaries Association’s (TIA) Second Quarter 2021 TIA 3PL Market Report, which was recently released, showed significant annual gains for key brokered freight transportation metrics. 

This report is based on monthly data from TIA member companies who submit real operating data and respond to questions on business conditions impacting the 3PL sector. Types of questions that the member companies’ answers include: number of shipments by mode, total billing, and gross margins. Other data collected are customer-based forecasts to offer up expectations of near-term business volume.

TIA officials said that this report represents more than 1.6 million shipments and more than $3.8 billion in total revenue for the second quarter.

Total quarterly shipments increased 11.3%, from the first quarter to the second quarter, and were up 21.7% annually, and total revenue rose 21%, from the first quarter to the second quarter, and was up 59.1% annually. Gross margin percentage was off 110 basis points, from the first quarter to the second quarter, and was off 460 basis points on an annual basis.

“We know now that the COVID phenomenon (disease, restrictions, economic stimuli) has kicked off a remarkable economic boom concentrated in the transport-intense sectors of the economy,” said TIA Chief Economist Noël Perry in a statement. “As a result, we have had an acceleration of demand that no supply chains can keep pace with, not to mention doing it with the handicaps currently affecting most supply chain aspects. The result is a record capacity crisis that has imposed significant challenges on the brokerage industry.”

Perry added that such volatility in market conditions is especially important for brokers because the spot market they serve is the place where market stresses naturally congregate.

“For almost every market segment, volumes increased; truckload saw substantial gains, as well as LTL,” TIA President & CEO Anne Reinke told LM. “The intermodal segment has been challenged by some rail service and congestion issues and as a result those volumes remained sluggish over the quarter. All of our members, from every revenue classification, experienced an increase in volumes and gross revenues, albeit recognizing that the costs of transportation and the driver shortage affects their net profitability. Overall, it was another quarter of heavy volumes, providing more affirmation about the critical role our members play in the supply chain.” 

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The national average price per gallon of diesel gasoline saw a very slight decrease, for the week of August 16, according to data issued this week by the Department of Energy’s Energy Information Administration (EIA).

With a 0.008-cent decrease, the weekly average came in at $3.356 per gallon, following a 0.003-cent decrease, to $3.364, for the week of August 9. Those two consecutive weeks of minimal decreases were preceded by a 2.5-cent increase, to $3.367, for the week of August 2, which was preceded by a 0.02-cent decline, to $3.342, for the week of July 26, the first decline it saw in 12 weeks, at the time.

Compared to the same week a year ago, this week’s national average is up 92.9 cents, trailing the 93.6-cent annual spread, for the week of August 9.

The national average again topped the $3 per gallon mark for the 20h consecutive week, going back to the week of March 1, when it came in at $3.072 per gallon. And before the week of March 1, the national average had been below the $3 per gallon mark since the week of February 2, 2020, when it posted an average of $2.956. 

West Texas Intermediate Crude oil is currently trading at $66.77 on the New York Mercantile Exchange.

In its Short-Term Energy Outlook, the EIA is pegging the average price per gallon of diesel to come in at $2.97 in 2021, with 2022 forecasted at $2.92. For WTI Crude, it is calling for the 2021 average to be $58.91, with 2022 at $56.99.   

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Data recently issued by DAT Freight & Analytics, an online marketplace for spot market truckload freight, and the DAT iQ data analytics service, showed a slight increase in the number of available loads on the spot truckload freight market, for the week ending August 1.

DAT reported that the number of available loads on the spot truckload freight market increased 0.3%, and the number of available trucks, for the week, was off 1.2% on a sequential basis. The firm explained that while spot market truckload rates usually see a seasonal dip following the July 4 holiday, that was not the case this year, with rates remaining high throughout the month.

Driving those higher rates, it said, was demand out of Southern California, as well as other port markets, too. And it added that July volumes were down compared to June, which it said represents the busiest month on record, with the number of available van, refrigerated and flatbed loads on the DAT network down 17.1% while capacity was off 6.6%.

DAT highlighted some key data points, for the week ending August 1, including:

the average van rate was $2.73 per mile, matching the average for July. In DAT’s top 100 van freight markets by volume, the number of loads moved increased 2.5%, for the week;
Los Angeles to Chicago averaged $3.13 per mile for spot van freight and the number of loads moved soared 39.9% in the last four weeks. DAT said that the ongoing chassis trailer shortage has been exacerbated by higher-than-normal container dwell times for local container delivery and intermodal rail cars to move containers east. All of this is contributing to higher spot market truckload volumes off the West Coast as shippers struggle with reduced intermodal capacity on freight lanes to congested inland destinations;
the number of reefer loads rose 4% last week while truck posts declined 1%, and the national average reefer load-to-truck ratio inched up from 12.8 to 13.5 last week and the national average spot reefer rate rose 1.7% to an average of $3.15 per mile (rates include a fuel surcharge); and
the national average spot flatbed rate held at $3.00 per mile last week, 11 cents less than the July average. Flatbed load-post volumes fell 2% week over week and are now down 4% over the last month. Capacity tightened with an 8% decrease in equipment posts compared to the previous week, which pushed the flatbed load-to-truck ratio higher from 44.6 to 47.4

In a recent interview, DAT Chief of Analytics Ken Adamo told LM that there is a lot of typical seasonality present.

“We continue to see capacity not being able to keep up with demand,” he said. “That really is the story…and leading to these higher than seasonally typical conditions. Frankly, it is higher than what you would expect from a long-term trend perspective.”

Addressing contract truckload rates, Adamo explained that spot rates lead contract rates, in what he called a very pronounced relationship.

“It is a function of direction, duration (how long rates are up or down), and magnitude,” he said. “Spot rates have been up for a long time by a large amount so that almost necessarily brings up contract rates. Shippers are trying to move their freight back into the contract market. If you take the rate aspect out of it, they are trying to lower their freight transactions on the contract market and get their routing guides back in shape. The only way for that is for carriers to forgo the very hot spot market and go back to their old contract rates and entice them with increases in their contract rates, whether they are a common carrier or a main carrier in the routing guide.”

What’s more, for the better part of the last year, Adamo said that shippers have been putting in higher and higher contract rates, with the intent of enticing capacity back into the routing guide, which has largely failed, as spot market rates are still high and there has been no enticement back to the contract market.

“If the market is normally 85%-15%, for contract to spot and it goes to 80%-20%, five percent of a trillion dollars is a lot of money,” he said.   

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The national average price per gallon of diesel gasoline remained on an uneven path, for the week of August 9, according to data issued this week by the Department of Energy’s Energy Information Administration (EIA).

Falling 0.003-cents, this week’s national average came in at $3.364 per gallon. This followed a 2.5-cent increase, to $3.367, for the week of August 2, which was preceded by a 0.02-cent decline, to $3.342, for the week of July 26, the first decline it saw in 12 weeks, at the time.

Compared to the same week a year ago, this week’s national average is up 93.6 cents, trailing the 94.3-cent annual spread, for the week ending August 9.

The national average again topped the $3 per gallon mark for the 20h consecutive week, going back to the week of March 1, when it came in at $3.072 per gallon. And before the week of March 1, the national average had been below the $3 per gallon mark since the week of February 2, 2020, when it posted an average of $2.956. 

West Texas Intermediate Crude oil is currently trading at $67.56 on the New York Mercantile Exchange.

In its Short-Term Energy Outlook, the EIA is pegging the average price per gallon of diesel to come in at $2.97 in 2021, with 2022 forecasted at $2.92. For WTI Crude, it is calling for the 2021 average to be $58.91, with 2022 at $56.99.   

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Stay up-to-date with news and resources you need to do your job. Research industry trends, compare companies and get market intelligence every week with Supply Chain 24/7.
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