Freight Cycle of 2018 vs. 2021
Many of us know about the shipping crisis going on currently, but not a lot of people know that some of the issues began several years ago. The freight market cycle began to form a tighter capacity cycle during 2017-2018. 2020 presented a global pandemic and now, in 2021, we are experiencing a shipping container crisis. Though economies during these two time periods were significantly different, the freight patterns were very similar.
Why Are Freight Cycles So Similar: 2018 vs. 2021?
On paper, the freight cycles of 2018 and 2021 line up in so many ways. Though the economy during both time periods was very different, the similarities can’t be ignored. During an episode of the DAT iQ Market Update show they explore the vast commonalities between the two years and answer questions asked by their audience.
The load-to-truck ratio (LTR) is calculated as the number of loads divided by the number of trucks represented on DAT Load Boards. This ratio indicated the balance between market demand and capacity. A change in spot market demand signals spot rate changes across the board. With a few exceptions, the LTR trends of 2021 seem to follow the same pattern as the LTR in 2018.
With increasing supply and demand experienced during the year as well as the International Roadcheck Week in May of every year, the patterns seem to follow the same path. During the International Roadcheck Week, flatbed carriers take time off during that week which often results in higher LTR readings and acute flatbed capacity crunches. After certain holidays throughout the year, for example, after Easter and Memorial Day there were surges in LTR during both years. When there is a reduction in drivers and trucks on the road, there is often a spike in LTR.
What Were The Reasons For Increased Capacity Crunch and an Inflated Flatbed Rate During 2018?
During 2018 there were numerous factors that impacted the flatbed rate rally and capacity crunch. Changing weather patterns are often the results of inflated flatbed rates and other shipping issues. Hurricane Harvey and Irma’s ripple effect created an increase in building material shipments which drove the demand for flatbeds in the regions with the most damage.
During 2018 the country also experienced economic stimulation due to a change in corporate tax codes. This boosted the industrial economy, which created a higher demand for flatbeds. Oil fracking was a hot topic in 2018. The oil drilling frenzy increased the demand for flatbed carriers to haul all the drilling equipment and machinery. The flatbed spot rates peaked during the middle of the year due to a 51% increase in the number of oil drilling rigs. Crude oil prices also increased as a result of oil drilling.
What Are The Reasons For An Increased Capacity Crunch and an Inflated Flatbed Rate in 2021?
The beginning of 2021 started off with a bang with changing weather phenomenons. In February of 2021, a Polar Vortex event took place, which resulted in an enormous backlog of activity. It took all of Spring to recover from this event that caused an acute capacity crunch and many shipping delays. This year has also presented some new situations like a pandemic-driven housing boom. This resulted in a huge increase in lumber truckloads, with over 1.5 million new homes being built this year in the US. The global pandemic continues to affect the shipping industry in a multitude of ways and many experts believe some of which are yet unseen.
Where Are We At Now?
With unprecedented situations continuing at the Port of Los Angeles and Long Beach, anchored merchant ships continue to pile up on the west coast. As of November of this year, flatbed load-to-truck rates are up 26.9% as compared to November 2020. Flatbed Spot Rates are up 24.3% from November 2020. 2018 freight capacity was the tightest seen by experts in a decade, but after the year we have all experienced there is a new reigning champion. The pandemic has resulted in an even tighter freight capacity.
Trifecta Transport Can Help
As freight shipping companies continue to deal with the effects of tight capacity, let us at Trifecta Transport take some stress off your shoulders. Dealing with time-critical logistics on top of a pandemic and increased shipping prices is enough on your plate. At Trifecta Transport, we handle all the hard work so you don’t have to. We are serious about saving our clients time, money, and resources by providing one-on-one logistic services with the best shipping rates to meet your unique needs. By taking care of the entire life cycle of your shipment, we contact multiple carriers so you don’t have to. We make sure your order gets to the proper destination on time.
Contact Us Today
If you need help navigating through this next chapter of your business and want to find solutions to help maximize your productivity, our team at Trifecta Transport is here to help you. Call us today and let’s explore all our resources to help take your business to the next level.