After experiencing record lows in April and May as the country shut down in an attempt to contain the coronavirus pandemic, June’s transportation figures are more hopeful. Experts cautiously agree that the shipping industry is bouncing back and project that this is a reflection of the overall economy. Here’s what we know to date.
Comparing year-over-year volumes, the Canada Border Services Agency reported that approximately 87,500 truck drivers crossed from the U.S. to Canada during the last week of June in both 2019 and 2020. These numbers are promising, indicating that cross-border freight volumes are rebounding from the impacts of COVID-19, while also remaining steady during two major U.S. holidays and the roll out of the United States-Mexico-Canada Agreement (USMCA). This is also the “first time since March that weekly truck crossings have matched their seasonal norms.”
Because 2018 was a banner year for freight volumes, some argue that it makes for a better year-over-year comparison. In a two-year stack comparison, the 2020 freight volumes are currently +5% over 2018’s numbers.
Also in June, the Logistics Manager’s Index showed improvements in inventory levels, warehousing utilization, warehousing prices, transportation utilization, and transportation prices. The Index measurement grew by seven points, marking its highest rate since February 2019.
Shipments from Falvey Shippers clients echo the market fluctuations, decreasing -39% between February and May 2020 as a result of coronavirus. In June, client shipments rebounded to February volumes.
Slowly Increasing Capacity
Shipping capacity has been slower to recover, but is starting to react to increasing volumes.
In part, the Payment Protection Program (PPP) has helped buoy capacity by infusing the transportation and warehousing sector with $17 billion in funds. To some extent, PPP has helped keep people employed and businesses operational during the nationwide shutdowns.
Carriers are also beginning to show indications that they are confident in declining freight and seeking competitive pricing. As long as volumes remain high, it’s reasonable to expect both tender rejections and upward pressure on rates to increase.
Our team at Falvey Shippers will continually monitor industry shifts and how the evolving COVID-19 mandates affect the overall supply chain and our clients. Domestic shipping stands to experience dramatic growth if trends such as on-shore manufacturing and accelerated adoption of “at-home” technologies become priorities to help contain coronavirus spikes.
Read more about our take on how COVID-19 is affecting the industry.