Sectors on the way to a Robust Recovery
Tuesday, July 28, 2020
Retail freight has not been affected negatively since COVID-19 came to the U.S. in February. Retail is expected to decline once the temporary stimulus checks and expanded unemployment benefits run dry.
In regards to industrial freight we are in a true global recession. Uncertainty brought about by COVID-19 leads to a fall in demand. Fall in demand leads to less industrial production meaning less employed.
Coal decline over the years, fracking sand being bought locally, and oil/gas industry boom have all attributed to a big decline in rail volumes. Add the current global issues and rail is getting hit hard.
Shipping by air has dropped roughly 70% since the spring, when capacity shortages were widespread because of surging medical-supply orders, but have been slowly moving back up. Reservation backlogs, more than ocean rates, are making business consider airfreight again.
Shippers are being aggressive to lock in low rates because companies are trying to claw back some money due to budget cuts due to how brutal of a year 2018 was and COVID-19. Contract rates dropped to numbers where they were in last half of 2017. Spot rates are where they should be in June. Other thing to keep in mind is that since March 6% capacity has left the industry. There is a high risk of supply not being able to keep up with demand if we have a robust and healthy recovery.
• Strickland, Zach. “Watch out Trucking, Industrial Sector Has a Pulse.” FreightWaves, 25 July 2020, www.freightwaves.com/news/watch-out-trucking-industrial-sector-has-a-pulse.
• Kulisch, Eric. “Airfreight Rates Expected to Shoot up by September.” FreightWaves, 26 July 2020, www.freightwaves.com/news/airfreight-rates-expected-to-shoot-up-by-september.
• Miller, Greg. “FeightWaves 3PL Summit: Worrying about Freight Markets (with Video).” FreightWaves, 23 July 2020, www.freightwaves.com/news/freightwaves-3pl-summit-why-you-should-be-worried-about-freight-markets-with-video.