Data illuminates bright spots in U.S. freight market, FreightWaves experts say

The U.S. freight market may have taken a beating since last summer, but data shows that it remains resilient.

“Those who naively thought, ‘The freight market is cratering.’ It wasn’t true,” FreightWaves Chief Revenue Officer George Abernathy said on Wednesday (February 6) during Cargo Logistics Canada, a supply chain expo and conference held in Vancouver.

Abernathy led a panel discussion about data and the freight market with FreightWaves markets expert John Kingston and FreightWaves Chief Insight Officer Dean Croke. The session showcased SONAR, FreightWaves’ analytics platform, which provides near real-time freight-market data.

Abernathy said the 60-plus percent drop in the Outbound Tender Rejection Index – a broad indicator of the freight market  –  since its highs in the summer of 2018 doesn’t tell the full story.  Additional indicators on FreightWaves’ SONAR analytics platform, including the Outbound Volume Rejection Index and Tender Lead-time Index, paint a more nuanced picture of the U.S. freight market, and showed a post-holiday rebound.

“It appeared from the data that savvy shippers and intermediaries acting on behalf of shippers saw the opportunity to move freight into the spot market because of excess capacity,” Abernathy said.

Croke explained how SONAR offered an important early warning in 2018. “The demand for flatbed disappeared overnight when much of the industry was thinking capacity continued to be constrained,” Croke said.

Croke also demonstrated how SONAR provides weather data on roads in the United States in Canada, thanks to data from cell-towers and connected trucks. It allows companies to see road-level conditions and reroute trucks in advance.

During the discussion, Kingston also briefed attendees about forthcoming changes in maritime diesel regulations brought on by the International Maritime Organization (IMO). According to the IMO, all shipping fuels must contain less than 0.5 percent sulfur by 2020 (the regulation is known as IMO 2020). “This has been coming for a long, long time,” Kingston said.

He noted that IMO 2020 may open the door for alternative fuels such as liquid natural gas but the expectation remains that most shipowners facing the need to reduce the sulfur content in their fuels will turn to either low sulfur fuel oil or a low sulfur marine diesel. The concern for the transport sector is that a move to marine diesel will introduce a new competitor into the market for diesel, lifting prices for truckers and other diesel users in the transport sector.

But Kingston cited recent work by the U.S. Energy Information Administration that suggested the average increase next year  – all other prices being stable  – might be about 25 cents per gallon, a number that is not “apocalyptic.”