North American Freight Market Insights

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Transportation Market Overview

TOP STORY: Truckload spot market strategies are an opportunity in any phase of the market cycle

Early in 2022, the U.S. truckload market started with a vengeance as COVID-19 Omicron illness effectively reduced the active truckload capacity. According to C.H. Robinson voice of carrier insights illness related absenteeism pulled 1–5% of drivers off for much of the first quarter.

This small, single digit reduction of the active truckload fleet drove spot market pricing to record-setting levels. It also meant carriers rejected contract/committed loads in route guides, sending loads deeper into route guides and to the spot market. This of course drove up the final price paid from deeper positions in the route guide and spot market.

That cost overrun pressure has many shippers looking for strategies to recoup their budget overages.

Can shifting freight to the balanced spot market of Q3 help overcome the impact of Q1?

The short answer is yes. There is an opportunity to benefit from today's spot market pricing. In fact, doing so could potentially allow you to take advantage of the 30%+ drop in average nationwide spot market truckload van per mile rate.

Our academic research continues to show that contracted freight in a hierarchical route guide provides great service and price. However, it also shows that some freight does not do well in a committed route guide.

If you’re asking, “Should I move some of my truckload freight from my route guide to the spot market?” The short answer is probably “yes” so you can benefit from the opportunity presented by today's spot market pricing. This guidance however still requires strategic thinking for a couple reasons:

  1. Today's capacity market may be going through a shift—potentially causing disruptions
    This would bring some variability to the spot market performance as smaller carriers face challenges of lower pricing, very high diesel costs, and fewer available spot market freight options. See the opening of our truckload section of this report for insights on how the small carrier community may be responding to the changing market.

    Presuming the market is shifting, this is a disruption to service as capacity is moving across the carrier size segment spectrum and presumably some is exiting the industry.

    The disruption in the spot market should be a consideration when developing your spot market strategy. How you access the spot market will influence your experience and results. Working with a C.H. Robinson representative can help you understand the possible impact of a shifting market.

  2. Our research shows good strategy yields best price paid in any phase of the market cycle, not just a balanced or soft market
    The following strategies are assembled from various C.H. Robinson sponsored academic research projects. They show statistical correlations across markets that are tight, loose, and in transition.

    • Segment your freight portfolio by volume, consistency, and volatility. Predictable demand patterns of shipment tender to a transportation provider are highly correlated to tender acceptance and realizing the expected price. Less predictable shipments tend to be rejected by the primary/awarded transportation provider with higher frequency, requiring a backup provider or spot market at a higher price than planned.
    • Backup coverage only performs to fourth position in a route guide (first, second and third backup). Research found, on average, after the fourth position, most tenders are rejected and shipments are then moved to the spot market, seeking capacity at between 23% and 35% premium over the primary awarded provider depending on the market tension.
    • For shipment tenders rejected by the primary/awarded transportation provider:
      • Fourth position was most often the maximum depth for coverage in tight markets
      • Second position is typically the depth for coverage in loose markets

As noted earlier in this report, strategy is key to maximizing what the truckload spot market can offer in any market

These four tips can help you succeed, no matter what the market has in store:

  • Segment freight portfolios by predictable demand patterns with a rationalized supplier base and high performing suppliers.
  • Be mindful of the market balance of capacity for each corridor. Corridor traits such as oversupplied, undersupplied, and balanced will influence strategy.
  • Develop a spot market strategy that uses today's digitally enabled relationships, positioning the spot market somewhere between the second and fourth position.
  • Follow a standard procurement request for proposal (RFP) cadence and maintain route guides where under performance surfaces.

These strategies and others can help ensure transportation spend is as near budget as possible and the best that any market cycle can offer.

For more insights and details, please read our white papers, or connect with our experts for in-depth conversations about your challenges and demonstrations of our technology.

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Full Truckload Shipping

TOP STORY: Today's market may be going through a shift

In 2021, the U.S. trucking market saw exceptional expansion of new carrier startups. Over 100,000 new companies with fleets of 1–5 trucks were started.

This new carrier community works mostly, if not exclusively, in the spot market and is facing the pressure of falling spot market rates, record diesel costs, and decreasing spot market freight volumes.

The capacity market tends to begin to cycle in these environments as seen in the following market indicators:

  • Used truck pricing in April started contracting from record heights for the first time in the pandemic period. This tends to be an indicator of carriers not expanding their small fleets or not updating equipment in an environment of less opportunity..
  • Less freight is migrating to the spot market from route guides as shipment tenders to awarded carriers/brokers is increasingly accepted and when rejected is most often covered by the first back up. (Source: TMC, a division of C.H. Robinson)
  • Voluntary revocations of operating authority have been increasing. The second quarter of 2022 rates are now more than double the rate seen in the first half of 2021. Source: FMCSA. Voluntary revocations do not offer the business reason why the carrier voluntarily gave up their operating authority, but are considered signals of lessening market opportunity.
  • Trucking labor is experiencing growth when unexpected and not needed. (Source: BLS) Presumably as self-employed (owner-operators) discontinue operations and select the safety of employee status of a larger carrier.

Today's truckload spot market has not collapsed, it has corrected

From the exceptional tension of Q1 caused by COVID-19 related absenteeism to today's market, it is tempting to suggest that the truckload market as indicated by the spot market, has collapsed and gone into an oversupplied situation.

Perspective is helpful at this mid-year reflection and forward planning point. Shown below is DAT's load to truck ratio (LTR) for dry van year to date. The correction from Q1 to present is evident.

The five-year average pattern, however, is well established now at about 19 weeks since the drop. The volume of freight in today's freight market is reduced as displayed by load postings dropping from a high of about 2.25 million per week earlier in the year to just a bit over 1 million per week as a sustained pattern through last week.

Truck postings have been holding a narrow pattern with some downward and upward variance. This pattern is being watched closely by all market participants, but does bring perspective to the change in the market.

What comes next in terms of freight volumes and capacity shifts?

The following insights offer perspective of the spot market to help reflect and plan for the second half of 2022:.

  • Economic environment: Key to this pattern is freight volume. Each business will need to discern their thoughts on H2 2022 and the resulting freight volumes.
  • Supply response:
    • Will supply contract?
    • If it contracts, how fast?
    • Does the 2021 growth of 100,000 carriers mean more fragility than previous cycles?
  • Spot market tension and pricing shown is national, individual markets and lanes can have much tighter and looser experiences, suggesting value in segmented strategies.
  • Stay close to the market dynamics. The spot market is a good leading indicator of the broader contract market.

Spot market, committed market, and capacity insights

Spot market settled into more balanced position around five-year averages

The three primary truckload segments have seen greater balance return to the spot market load to truck ratio (LTR) with some stability in their weekly variance.

The charts below show six years of DAT's LTRs. The red line represents 2022. Between 3:1 and 4:1 LTR for dry van can be considered a reasonably balanced market, while balanced for refrigerated is closer to 6:1 and flatbed considers 20:1 balanced. The spot market is a leading indicator of the broader contract market, providing insights to market tension and direction of evolving price

Since about week 13, the van and refrigerated spot markets have offered little variance in LTR. The van market has been bouncing above and below 4:1 and the temperature controlled market somewhere around 6 or so.

The market continues to show some reluctance for additional free fall of pricing at these ratios as pricing is getting rather close to the estimated cost of operations in week 29.

The C.H. Robinson dry van spot market forecast, presented below, shows the current broker to carrier cost per mile and how it is closing in on the operations expense per mile estimate. Historically, the cost of operations has been the bottom of the market.

Dry van LTR

The dry van LTR is in the range of a balanced market. It is currently bouncing around 4:1 nationally and on a multi-week increase in LTR. Individual markets range from oversupplied to as tight as 26:1 LTR. The five-year average for week 29 is about 3.6:1

dry van ltr

 

Refrigerated van LTR

Temperature controlled truckload has stabilized in the early produce season at a balanced market level of 7:1 LTR, and bouncing between 6:1 and 9:1 with a 5-year average of 6.8:1. Key growing regions across the midwest United States show ranges largely between 3:1 and 35:1, with some markets such as West Texas and Southern California displaying some of the greatest tension at the high end of the national range.

The fresh produce harvest season appears to be less robust than most seasons as a result of inflation. In the refrigerated truckload section below, this is discussed in more detail.

reefer van ltr

 

Flatbed LTR

Flatbed, like van and refrigerated capacity, has seen meaningful market correction, and is largely at a more balanced market. The current 23:1 LTR presents a capacity market well matched to the demand for flatbed services and below the 5-year average for this week of 30:1.

The Southeast continues to be notably tighter than other parts of the country and influences the national LTR. Please see the flatbed section of this report for additional insights.

DAT flatbed ltr

The first half of 2022 continues to offer a shifting experience as the forces of supply and demand are unfolding. It may take until July to gain a sense of what the second half of the year might look like.

Dry van and refrigerated DAT LTR by region
The 6-year aggregated view of the U.S. spot market above is broken down below for the dry van spot market by 3-digit ZIP code regions for the week of July 10-16. This view helps demonstrate the meaningful variance of markets—some have plentiful capacity while others struggle materially to keep up with demand.

The current national average is roughly 4.1, with a range of 1:1 to over 19:1 across 3-digit ZIP code areas. Most notable are key markets of Los Angeles, CA and Laredo, TX seeing LTRs in the 13:1 to 15:1 range.

 

 

The refrigerated market is displaying a similar pattern to the van market, being near the 5-year average for spot market tension. The most tension as a result of the produce season in the Midwest as well as coastal regions. Though a muted produce season LTRs in yellow to red zones range from 7:1 to over 50:1.

Contract truckload environment

Most (75%–85%) of the U.S. for-hire truck market is moved through commitments most often managed via hierarchical route guides and dedicated truckloads. What follows are some perspectives and notes on today’s contract truckload environment.

Route guide performance

Companies commonly use waterfall (or hierarchical) route guides to manage awarded freight on lanes with some level of demand pattern predictability. The following insights are derived from TMC, a division of C.H. Robinson, which offers a large portfolio of customers across diverse industries throughout the United States.

Two key metrics of route guide performance are first tender acceptance (FTA) and route guide depth (RGD). RGD refers to how far into a route guide a shipper must tender shipments before carriers accept loads, or the average number of tenders per load. FTA is a percentage of how often the awarded primary transportation provider accepts their shipment tenders.

During the week of July 10–16, 2022, RGD by U.S. region continued to show the Northeast increasing, now back to an average RGD of 2. Other regions show a pattern of stabilization.

Broadly speaking, route guides are performing well, with primary service providers accepting loads at or near pre-pandemic levels and the first backup provider accepting rejected tenders most of the time.

Routing guide depth

The chart above from TMC, a division of C.H. Robinson, reflects weekly RGD regionally across the United States through the week of July 10–16, 2022.

When looking at the Northeast region drop during the week of July 10–16, 2022, It appears that the kick off of the summer beverage season from PA was key to the run up in loads against available trucks. That balance has been restored as seen in the chart above.

The overall RGD improved to 1.28 from 1.45 a month ago. This improvement was largely driven by the Northeast with the other regions consistent month over month. Distance bands over 400 miles improved a bit month over month as well.

June FTA for North America shows continued improvement posting 86%
This is much improved from the lowest pandemic point of January 2022 at 79%.

For some pre-pandemic context:

  • Week of Feb 23, 2020, FTA was 90% and RGD was 1.17
  • June 2021 average FTA was 82%

It is helpful to watch both FTA and RGD metrics. There is a clear trend of continued improvement of both FTA and RGD, signaling that demand and supply are more aligned today than in the past couple years. As such, less freight is also being sent to the spot market because of failing route guides.

June RGD across distance bands
For June, all three distance bands experienced improvement in RGD as secondary providers increasingly accepted primary provider rejections. Info from the first two weeks of April and pre-pandemic comparison offers additional perspective:

  • Short haul (less than 400 miles) posted ~1.25 in June, which is slightly improved from May and still elevated from 2019 and the first half of 2020 levels, which were in the 1.1 to 1.2 range.
  • Middle distance (400–600 miles) is about 1.5, slightly better than May and still elevated from 2019 and the first half of 2020 levels, which were in the 1.3 to 1.4 range.
  • Long distance (over 600 miles) is just above 1.5, about the same as May and like the other distances, it is slightly above 2019 and the first half of 2020 levels, which were in the 1.1 to 1.3 range.

U.S. spot market dry van truckload rate per mile insights

Shown below is the C.H. Robinson 2022 truckload dry van spot market cost per mile index without fuel. Like others, this forecast has been and will continue to be amended as the economic forces shape freight volumes and the capacity community responds.

  • The dark blue solid line is DAT's cost per mile to carrier without fuel.
  • The blue dotted line is the C.H. Robinson forecast, bounded on the bottom by the estimated cost per mile to operate a truck.

When looking at previous market cycles, the cost per mile to operate a truck has been the bottom of the market. Then supply tends to contract, creating tension and pricing inflection. The length of time a market is at the bottom varies by the economic conditions and the level of oversupply.

For perspective, shown here is the spot market forecast. Analysts have offered contract pricing forecasts between 8–9% year over year (Y/Y) without fuel as carriers work to recover increasing operating expenses against optimized multi-leg routes from route guide awards.

C.H. Robinson will continue to apply its broad market costs and market experience to the forecast and continue to present updates on a regular cadence.

Routing guide depth

 

Diesel pricing outlook

As you can see in the below graph from FTR Transport Intelligence, diesel pricing plotted from the EIA forecast, will drop to roughly $4.50/gallon in 2023 as a nationwide average with the annualized 2022 cost per gallon at $4.73, down from the nationwide average spike of roughly $5.50 with California the highest point in the nation at $6.27 in mid-June.

With the forecasted decline in diesel pricing, the levels are still very high historically and will continue to be an increased cost for carrier operations where fuel surcharges don't cover repositioning miles, idle time, or out-of-route miles.

Routing guide depth

Voice of the carrier from C.H. Robinson

C.H. Robinson has two customer communities, shipper customers and carrier customers. What follows are insights from conversations with carriers of all sizes to offer perspective into their top concerns early in 2022. Below is a summary of the reoccurring themes.

Employment
There has been a change in employment culture post-pandemic.

  • Drivers value home time more than ever
  • Sick days are taken more often, impacting capacity (COVID-19 is still primary illness)
  • Mechanics are difficult to find, impacting maintenance and active capacity
  • Driver applications improve, drivers from small companies are applying at larger ones
  • Continued upward pressure to increase pay and benefits packages

Fuel

  • Fuel costs for idle time and deadhead/repositioning miles is an increasing concern
  • Mixed reports on shippers’ willingness to increase rates to offset higher fuel costs

Equipment

  • Long lead time (still ~10.5 months) for tractors is a continuing problem
  • Price variability for new equipment is a concern
  • Higher cost and scarcity of parts for maintenance continues
  • Fleets are aging against the challenges to replace tractors and trailers (OEM supply chain challenges)

Imports and inland transportation

Ocean imports from Asia

  • While we are entering traditional peak season on the Transpacific lane, demand is not showing the momentum seen in the past two years.
  • The strength of the peak season and its effect on rate levels is expected to be milder than experienced while China’s COVID-19 related lockdowns were still in effect.
  • Peak season (back to school/holiday goods) will start shipping in August through end of September.

West Coast longshoreman labor negotiations

  • The current agreement between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) ended on July 1.
  • Talks often go past the agreement expiration date, however this year, both parties insist that normal operations will continue until a new agreement is reached, avoiding any interruptions.

U.S. airport operations challenged by COVID-19

  • While recovery times at U.S. airports remain elevated relative to pre-pandemic conditions, there are fewer extreme delays as demand has softened recently.
  • Even historically challenging terminals at LAX are operating rather smoothly.

For an entire portfolio of insights, visit our Global Freight Market Insights or contact your C.H. Robinson account manager.

Temperature controlled shipping

Refrigerated spot market tension has settled

It is currently in what is often considered a healthy market of supply and demand balance. Refrigerated shipping continues to experience a market creating capacity and pricing opportunities in most regions, specifically the Southeast, Northeast, and the California market. Now is a good time to segment your freight portfolio by key attributes and amend your spot and contract strategies to prepare for the next cycle.

Ongoing diesel impacts continue

These costs are very material for the refrigerated truckload community. Carriers’ cost of operations is not fully covered with record diesel prices. Carriers are looking for ways to reduce fuel and occasionally choose to set their refrigerated units on cycle. This lowers the fuel need but can bring increased temperature variation to the trailer and goods. C.H. Robinson works closely with our carriers on temperature expectations to help ensure the quality of the goods in transit.

Produce season

The 2022 produce and grilling season has proven to be muted compared to previous years with softer load to truck ratios. Consumer demand continues to shift from fresh to frozen as consumers work to keep vegetables in their diet, but at a lower cost. In some lanes, the temperature shift is more visible than others, putting some pressure on the frozen segment of temperature controlled trucking.

Work with temperature controlled experts

Connect with our experts to learn more about how seasonal and supply imbalances affect your business and how our unique refrigerated transportation procurement and capacity solutions can help your shipping strategy for the next market cycle.

Flatbed

The flatbed truckload market has been working its way to a balanced market. This creates an opportunity for shippers to focus on their flatbed strategy.

Load volume continues to be rather good against what appears to be some expanding capacity. There is some capacity growth with carriers that have multiple trailer types. For example, when a carrier chooses to park a van trailer and put their flatbed trailer in service again. As such, the market is at a point of greatly improved performance compared to earlier in the year.

Just as now is a good time to think strategically about your van and refrigerated strategies to prepare for the next cycle, we recommend the same thing for flatbed services.

  • Plan a flatbed freight RFP: The disruptions of the past two years have taken a toll on many shippers’ flatbed strategies. Now is a good time to go to market with your predictable flatbed volume in a formal RFP to garner commitments and focus on your core providers.
  • Segment your flatbed needs: Sort by raw materials (inbound), inventory transfer, and finished goods. Segmenting by the freight attributes and business processes can create value in your strategic conversations with flatbed providers. This effort helps attend to service needs where you have flexibility and where you don’t while addressing where variability may surface.
  • Define your spot market needs: These should be well defined and shared with your spot market providers. Include business processes, expectations, and flexibility guidance.

This market provides the chance to bring strategy to a truckload mode that is often quite reactionary. Connect with your C.H. Robinson account manager to schedule time for a flatbed planning session.

Cross-border shipping: Canada

Canada ELD mandate

After several postponements to the enforcement of the electronic logging device (ELD) mandate in Canada, the Canadian Council of Motor Transport Administrators are now planning to put it into effect in January 2023 now that 52 ELDs are certified by Transport Canada for use in Canada. Source: Heavy Duty trucking

These changes will make it mandatory for commercial motor vehicle drivers who operate in Canada to use an ELD to record their hours of service (HOS). This will have a low impact on supply of trucks in the market compared to what we saw in the U.S. in 2018 as many carriers are already in compliance.

Vaccine mandate extended to September 30, 2022

The vaccine mandate, which led to protests and border closures earlier in the year, has been suspended for federally regulated air, rail, and marine sectors as well as domestic and international air travelers.

However, for cross-border truck drivers, it has been extended through September 30, 2022, according to Truck News. This is not expected to have an impact on cross-border freight movement as most Canadian drivers are already fully vaccinated and the percent of crossings on Canadian trucks has increased since the mandates were put in place. Today, Canadian trucks make up close to 90% of crossings, up from 80% pre-pandemic.

Intermodal shipping in Canada

Capacity is readily available in all lanes, including the high-volume intermodal lanes of Vancouver to Montreal and Toronto in both directions.

CP Rail is charging equipment guarantees across all lanes. C.H. Robinson has positioned containers from our fleet on the CP in an effort to help avoid the CP Rail equipment guarantees.

  • Calgary and Edmonton to intra-Canada points
  • Cross-border United States into Canada

Please connect with your C.H. Robinson account manager for details on Canadian rail opportunities.

Cross-border shipping: Mexico

Northbound market tension continues

Truckload tension, as expressed in the LTR for northbound loads, continues its pattern of roughly three loads northbound to one load southbound across the Mexico-U.S. border, despite the broader nationwide lessening of tension in the United States. This region will continue to require tailored attention for transportation management.

Continued improvement of DAT's spot market dry van LTR has recently settled into 6:1 range. This level of spot market imbalance continues to require flexibility in schedules, lead and transit times, and pricing for northbound freight, but is a noticeable improvement from May’s average LTR of 11:1. Laredo, Texas, and Otay Mesa, California, are two examples where the market remains busy, averaging 13:1 LTR. Source: DAT

As noted above, freight volumes are strong. The outlier here is the automotive industry, which is experiencing lower volumes. The capacity freed up from this industry is available and seeking contractual volumes. Please see your C.H. Robinson account manager to help discern opportunities to access this capacity.

Shipment detail requests add pressure
Carriers continue to set expectations for confirmed shipment details prior to pick up for intra-Mexico and cross-border truckloads.

Increasingly, carriers are requiring the Complemento Carta Porte (CCP) by the time of a scheduled pickup to ensure smooth events and minimize dwell events. Some carriers are declining tenders if the shipment information is not available at the time of tender to minimize the risk of long dwell times.

Carriers are limiting the volume of preloaded drop trailers at locations with a history of loads not moving right away. Due to the trade imbalance and continued issue of trailers used as storage, trailer pools and in effect, active capacity, are challenged.

As such, carriers prioritize shipments that have pre-set delivery appointments and have a history of quick unloading at U.S. border city destinations. Other shipments are being declined or prioritized lower. Currently 2–3 days is the max dwell time carriers are tolerating for dropped trailers.

Updates on PITA, CFDI, and Carta Porte
The National Customs Agency of Mexico (ANAM) published Bulletin #6 on May 12, 2022, announcing the implementation of the Aviso de Cruce (AVC), or Crossing Notice. Testing began on June 1, 2022, at all Mexico ports of entry, and will become obligatory August 1, 2022.

  • AVC will replace the PITA/DODA process
  • With the AVC, RFID tags are installed in each truck, replacing the single badge system worn by each driver
  • Fewer data fields will be required to generate the AVC document
  • The Crossing Notice must be generated and submitted to customs directly by the Mexican customs broker.
  • The user will not be able to generate multiple Crossing Notices with the same truck. Each Crossing Notice must be released from customs until a new Crossing Notice can be generated utilizing the same truck.
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Intermodal Shipping

TOP STORY: There is ample intermodal capacity available

Intermodal freight volumes remain flat—easing hub congestion
Service remains a critical focus area for the railroads as they struggle with hiring to fill open positions needed to increase service levels.

On July 18, 2022, a Presidential Emergency Board was tasked with communicating and helping railroads and the workforce reach an agreement to prevent a strike and help remedy the disagreement that has persisted for three years.

Imports from overseas
Both containers transloaded to domestic assets near the port and those sent inland on international containers have increased slightly over the past month and show positive momentum heading into the second half of the year.

The domestic intermodal outlook remains tempered. It faces truckload service as a competitor that can offer service and price improvements compared to earlier in the year. Nevertheless, as peak season approaches, there is anticipation that demand will follow historic trends and some of the capacity and pricing pressure of previous years.

Ample planning, accurate forecasting, and operational efficiency remain key to successfully navigating through intermodal peak season.

Considerations for today's intermodal market

  • Current affairs:
    • Potential labor strike by railroad workers
    • High price of fuel: Could see more conversion from truck to intermodal to relieve costs
  • Equipment availability
    • Small pockets of chassis shortages
    • Almost no shortage of available containers
  • Lane strengths
    • Inbound and outbound Northeast
    • Inbound and outbound Chicago
    • Inbound and outbound Dallas
    • Inbound and outbound California

Please connect with a C.H. Robinson representative to discuss modal conversion options and pre-plan peak season strategies to manage costs and carbon emissions. C.H. Robinson has container capacity to meet your needs.

Less Than Truckload (LTL) Shipping

TOP STORY: LTL carrier marketplace is shifting

There have been a few changes in ownership and closures this month. For most of these changes, the real impact on overall capacity is negligible, but these changes may impact your regional LTL strategies.

  • Closure: LandAir/Northeast Freightways LLC, 7/5/2022. Reports suggest closure was unanticipated by employees and customers. This was a small regional Northeast carrier that likely has little impact to most shippers. No impact to C.H. Robinson services in the region.
  • Acquisition: Pitt Ohio Express will acquire Teal’s Express Inc on 8/14/2022. Teal’s is a small private LTL carrier in the Northeast that will be additive to Pitt Ohio’s service.
  • Acquisition: Magnum acquires Jahn Transfer. Magnum will rebrand/market as Magnum effective 8/1/2022. This is additive to Magnum’s coverage in the Midwest.

New LTL contract carrier to C.H. Robinson portfolio

Panama Transfer is a small regional carrier servicing Iowa, southern Minnesota, and Eastern Dakota states. This is additive to our coverage, offering options to help shippers bolster a portfolio strategy.

LTL pricing insights

  • Pricing discipline: Expect LTL carriers to maintain pricing disciplines through 2022. While overall tonnage is showing some slowing of growth, capacity growth continues to lag demand growth.
  • Accessorial charges: LTL carriers are very focused on identifying freight characteristics that require additional cost coverage. Top examples include:
    • Extra length
    • P&D location with high cost attributes
    • Appointment or notification needed

Reach out to your C.H. Robinson representative to see what diversification options exist for your freight portfolio. Developing a diverse carrier strategy could help lessen the impact of market price and service challenges—so you can prepare for today and possible Q3 and Q4 pressured markets

Small Parcel

Peak season planning and expectations

Three years of experiencing rapid parcel volume growth and performance has made it difficult to forecast what’s coming. Now the industry is wondering if this forthcoming peak season will be any different.

Parcel carrier performance has improved but challenges, like reports from carriers of local delivery driver shortages, and high fuel pricing, are already circulating as planning starts.

  • Peak season surcharges: Carriers are already setting expectations that surcharges will again be part of this season
  • Higher pricing: Anticipate base rate pressure
  • Service: On-time delivery performance may continue to be a challenge

Seasonal pressures

The second half of the year starts with back to school volumes in July and August, followed by black Friday retail sales pushed earlier in the season.

FedEx in the news

FedEx has launched last mile optimization and integration tool that is promised to improve final delivery handoffs to the most appropriate operating unit. This could potentially lower operating expenses and improve service. Source: Freightwaves

Connect with your C.H. Robinson account manager to initiate a conversation with our parcel experts.

Government and Regulations

TOP STORY: AB5 stands as law in California

How AB5 impacts supply chains

Freight brokerage insights
AB5, the common name for California Assembly Bill 5, which requires companies that hire independent contractors to reclassify them as employees does not impact freight brokers.

A freight broker is fully defined as a different business than a motor carrier in federal law. Therefore, contract carriers like those that are independent contractors for C.H. Robinson will pass all the ABC tests.

Motor carrier insights
Motor carriers are impacted because with independent contractors, they likely fail the B test, “is the independent contract in the same line of business?” Motor carriers will have two choices for their independent contractors:

  • Hire drivers on as employees
  • Start a freight brokerage and have the independent contractors get their own authority and work through the brokerage

Keep these perspectives in mind
Based on what is known today:

  • There is possibly low impact to the market/capacity because this is about how capacity will be accessed, not the overall capacity
  • Brokerage is an alternate model from independent contractors that can be used
  • It might take some time for this transition to occur, depending on if there is an existing brokerage authority and if the carrier has their own operating authority

Currently the market is balanced to soft, so this may not impact the market in a way that is clearly attributable to AB5. Read the recent client advisory about the protests in southern and northern California ports. We will continue to follow this situation closely and provide further updates as the situation develops.

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