North American Freight Market Insights

TOP STORY: Labor is improving amid other challenges influencing the truckload experience

Labor is central to the logistics experience. Workforce demographics are key to trucking and warehousing jobs. As cited in publications and webinars by C.H. Robinson, the U.S. Census bureau data suggests a broadly aging workforce, with meaningful pressure on trucking as baby boomers continue to retire.

People 45–65 years old make up roughly 40% of trucking jobs. This demographic has been declining since 2018 and will continue until about 2025. It will not expand again until about 2030.

As we think of the trucking labor market however, gains have been made across the industry. Local trucking is up 10.6% from three years ago according to Jason Miller, associate professor of logistics at Michigan State University. Long-haul trucking and LTL markets continue to lag. In October, long-haul job openings improved but were still short 12,700 from same period in 2019 before the COVID-19 pandemic.

Source: Jason Miller, PhD. Additional reference to this visual on our blog at www.chrobinson.com.

These long-haul and LTL gaps are meaningful to the trucking experience. Expect them to improve in 2022 because of escalating wages and improved lifestyle efforts of the carrier community. Keep in mind, this gap may be slightly better than shown above as some talent migration the owner-operator segment is not reflected in the above figures detail due to self-employment status.

Regional trucking insights

• Southeast and Northeast markets are experiencing more traditional seasonal levels
• Texas and California markets are experiencing high demand, requiring continued diligence on both capacity strategy and lead time

Year-end seasonal insights

• Shippers started tendering loads for the for the last two weeks of the year the week of December 6, 2021
• Expect a similar trend as Thanksgiving in the last two weeks of December: tightening market, increased overall demand, increased spot market pricing, and route guide pressure

How the vaccine mandate impacts trucking and LTL

As mentioned in the government update of this report, there are no new updates to the implementation of the two executive orders mandating vaccines and there are many court challenges against them.

Truckload services will likely see minimum impact in United States and Canada for intra-country moves. For details on the potential capacity concerns for less than truckload (LTL) service and cross-border trucking between Canada and the United States, see those sections of the report.

• U.S. truck drivers are anticipated to be largely exempt from the OSHA mandate. Source: CNBC, quoting the Labor Secretary
• Canadian truck drivers are 85%–90% vaccinated Source: Trucknews.com
• Most LTL carriers are subject to two key elements of the mandates: Over 100 employees and holding government contracts

What to know about imports and inland transportation

Container dwell fees continue to be delayed as progress to clear the ports continues

The Port of Los Angeles and the Port of Long Beach announced today that consideration of the “Container Dwell Fee” would be held off another week, until Dec. 20.

Since the fee was announced on Oct. 25, the twin ports have seen a combined decline of 47% in aging cargo on the docks. The executive directors of both ports will reassess fee implementation after another week of monitoring data. Source: The Port of Los Angeles

Ocean’s impact on trucking in the near term
Ports will continue to face pressure for trucking and intermodal services well into Q2 2022. Use the following insights to better understand the sustained volumes and efforts to improve port congestion.

• Capacity from China and Southeast Asia continues to be very tight, expect this to continue through Q2 2022
• Congestion shows an improvement on paper, yet as carriers dwell further upstream, they’re not being included in backlog revised calculations
• Ocean carriers are pushing more interior point intermodal (IPI) cargo to inland ramps to help with port congestion
• Ocean carriers may send extra vessels to clear accumulated empty containers across terminals to enhance the fluidity of offloading and reloading empty containers
• Rates continue to be elevated and are expected to stay high before a pre-Chinese New Year rush

Airports continue to experience high dwell for imports
Trucks picking up imported air freight at U.S. airports face lengthy dwell times. LAX is the largest concern with dwell times that can last all day and into the next. In some situations, drivers need to be swapped out while a truck is still in line. As such, more companies seek transload facilities to transfer the load to team drivers to make up for lost time, but this increases cost and takes time to implement.

Spot market, committed market, and capacity insights

Spot market under continued pressure
All three primary truckload segments continue to display unprecedented load to truck ratio (LTR) tension. The charts below show six years of DAT's LTRs. The red line represents 2021.

A 3:1 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.

Throughout 2021 spot markets have been stressed and unique. As capacity continues to enter the market in 2022, these levels could decrease. Additionally, as trailers, containers, and chassis are unloaded and released to rotation, market tension may be improved. This will be a prolonged process of increased optimization. Currently, expect the first half of 2022 to continue with some higher levels of tension. The second half of 2022 is less clear. 

Dry van LTR
The graph below shows some downward trending of the dry van national LTR average. The map later in this report provides more detail to regional areas of tension and balance that create the national average.

Refrigerated van LTR
Like dry van, refrigerated LTR shows a slight relaxation of tension, but LTR levels are still at historical highs. Like dry van, refrigerated shipments have areas facing regional pressures and others closer to balance.

Flatbed LTR
As shown below, flatbed is experiencing a favorable trend while at historical highs. See the flatbed section of this report for more insights on the forthcoming flatbed seasons.

Through the upcoming holiday season until the end of 2021, expect active capacity to contract due to holidays and family gatherings. Some carriers are offering incentives to keep drivers at work against the market opportunity. Year-end freight volumes have the likelihood to be strong, especially in the port markets, so tension is expected to be high through year end in the ports and likely across the broader markets.

Be proactive on shipping plans and capacity strategies. Regional inclement weather could be problematic as it was with late winter weather earlier this year.

Dry van DAT LTR by region

The map below clearly shows high pressure in port areas, especially Southern California, cross-border Mexico, and Southeast ports.

Yellow, orange, and red regions are higher tension as they display LTR's over 3:1 (Note that yellow is up to 6.9:1)

Most (75%–85%) of the U.S. for-hire truck market is managed through commitments most often managed via hierarchical route guides. 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 C.H. Robinson’s 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

The chart above from TMC, a division of C.H. Robinson, reflects weekly RGD regionally across the United States through the week of December 5–11, 2021

During the week of December 5–11, 2021, the overall RGD across all regions is unchanged from month to month at 1.79, which presents some reasonable stability over the past few months with the exception of the spike from Hurricane Ida early in Sept for the Northeast. Regional RGD shows a slowly and minimally improved Southern region from a month ago. Both the Midwest and Northeast have shown some slight improvement over the past four weeks also. The story is the West which has been increasing over the past month with a recent material jump to ~1.8 for RGD.

October's FTA was at 80%, which is within the 80–82% FTA we’ve seen since the reopening of the economy in 2020. For some additional context:

• Week of March 3, 2019, FTA was 89% and RGD was 1.21
• Week of Feb 23, 2020, FTA was 90% and RGD was 1.17

Essentially, when the first tender is accepted at the same rate and RGD increases, fewer loads are covered with the first backup and likely more loads are going deeper in the route guide and to the spot market.

For November, short- and long-haul shipments showed no meaningful change in route guide depth with medium length of haul showing slight improvement. For perspective:

• Short haul (less than 400 miles) was unchanged holding between 1.4 and 1.5, which is 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) slightly improved from roughly 1.9 in October to ~1.8 in November, which is much 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) was unchanged from October, holding about 1.75 in November; like the other distances, is well above 2019 and the first half of 2020 levels, which were in the 1.1 to 1.3 range.

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 as the year ends, and provide some general projections for 2022. Below is a summary of the reoccurring themes.

• PTO/vacation for drivers
• Available drivers are declining for the remainder of the calendar year
• More drivers are requesting the last two weeks of the year off
Focus on keeping drivers home for the holidays
• Equipment shortages, including new tractor and trailer shortages caused by delays in manufacturing
• Carriers are shifting to relay models for middle distance and longer hauls.
• Older assets are not being turned over until there is a confirmation of arrival of new equipment
• Shipment tender rejections remain at all-time highs
  • Challenges with available capacity
  • Prioritizing freight with predictable demand and low dwell time

C.H. Robinson's spot market dry van truckload rate per mile forecast

Our 2021 forecast continues its upward course through the end of the year amidst the pressures of supply and shipment volumes, with a forecasted 4% increase between now and the end of the year.

The 2022 forecast has been increased from 3% to 4% year over year (Y/Y) average rate per mile to 2021 with the year-end 2022 rate expected to be near the 2021 year-end rate per mile.

As many model inputs continue experiencing variances, expect this model to evolve as inputs vary. Additionally, 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.

Key to the truckload experience into 2022 is access to smaller carriers as the labor migration is in a second year of a meaningful shift. This migration of talent is shrinking the active capacity in the largest carries, while meaningfully expanding owner-operators and the smallest carrier segments.

Connect with your C.H. Robinson team to discuss strategies to improve your access to capacity and options for adding greater stability to freight expenses.