Today’s Pickup: freight markets take a breather for July 4

Good day,

We hope everyone had a great Independence Day. Freight markets generally slow down after the end of the second quarter, around the time of the July 4 holiday, Zach Strickland explains in this week’s SONAR: State of the Market YouTube video. Turndowns got a small bump at the end of June as shippers rushed to move loads before the end of the quarter (OTRI.USA went from 25.2% on June 23 to 26.8% on June 27), but have since contracted to 24.4%. 

There’s also evidence that shippers and carriers took a nice holiday break: trucks in market (TRUK.USA) deteriorated to about 95% of its two week moving average leading into the holiday, then dropped way down to 72.5% on Independence Day. Post-holiday, trucks in market recovered to 94%, suggesting that at least some drivers are enjoying a long weekend. 

Explanation of the SONAR indices: 

Outbound tender rejections (OTRI.USA) measures the percent of loads that were tendered to carriers that carriers rejected. By measuring this, we can determine how willing or able carriers were to haul loads. A higher OTRI is an indication that capacity is tightening in the market. A lower OTRI means that capacity is loosening. 

Trucks in market (TRUK.USA) measures how many trucks are available for dispatch across the entire market vs. two weeks prior. In the above reference, there were 27.5% less trucks on the road than two weeks before. 

Did you know?

Data from the Institute of Supply Management (ISM) showed that US factory activity expanded at a even faster pace in June, as the manufacturing purchasing manager’s index rose 1.5 points to 60.2. 

Quotable:

“It is too early to tell what form(s) our new financing will take and it may or may not involve equity. Between the favorable industry environment and our own improved performance, we are optimistic about the possibility of more advantageous terms, although that will ultimately be subject to market conditions.”

-Thom Albrecht, Celadon EVP and CFO, on the carrier’s options for raising capital  

In other news:

AAR: Trade war could hurt US rail traffic growth

U.S. rail traffic trends last month were consistent with a healthy economy, but that trend could change if the country engages in a trade war, according to the Association of American Railroads (AAR). (Progressive Railroading)

Acute pilot shortage and fewer available freighters likely to drive faster drone adoption

The worsening shortage of pilots and concerns about available freighter capacity down the road are adding a sense of urgency to the deployment of drones to fill the gaps. A study published by Boeing last year found that more than 637,000 pilots would needed between 2017 and 2037. (The LoadStar)

Malls vacancies hit six-year high as online shopping takes a toll

Malls are the emptiest they’ve been since 2012, when the U.S. economy was still struggling to recover from the last recession. The vacancy rate reached 8.6% in the second quarter, up from 8.4% in the first quarter. (Wall Street Journal)

US adds 213K jobs; wage gains slow, unemployment up

U.S. hiring topped forecasts in June while unemployment rose from an 18-year low and wage gains unexpectedly slowed, indicating the labor market is still absorbing spare capacity. (Bloomberg)

Trump’s $500 billion trade threat makes China’s already battered investors shiver

Six months of wrangling over trade tariffs with the United States has wiped out about a fifth of China’s stock market value and driven its currency down sharply. But those moves may have just been a downpayment on what is yet to come. (Reuters)

Final Thoughts:

Yesterday, commenting on survey data from the Institute of Supply Management (ISM), Ibrahiim Bayaan, Freightwaves’ Chief Economist, wrote that “there is some evidence that these challenges [finding transport capacity] are already holding back what would otherwise be spectacular growth on the manufacturing side of the economy. Manufacturing output continues to expand overall in the economy, but the pace of growth has been below what the high ISM readings would suggest for the sector. With these challenges spreading to the service sector, there are concerns that freight issues may hinder growth in that side of the economy going forward as well.”

Hammer down everyone!

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