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Trucking Trends:
Truckload forecast: Issues that will shape the rest of 2022

By Dean Croke, DAT Freight & Analytics

When it comes to the second half of the year, the only thing transportation pros can count on is more volatility. Let’s look at what the rest of 2022 will hold for shippers and movers of truckload freight.

The imports are coming

According to PIERS, the bill of lading database from IHS Markit, containerized import volumes in June were around 8% higher year over year. “Cargo volume is expected to remain high as we head into the peak shipping season,” said Jon Gold, Vice President for Supply Chain and Customs Policy at the National Retail Federation.

NRF’s July is forecast at 2.31 million TEU, up 5.3% from last year, and would be the fourth-busiest month on record. August is forecast at 2.26 million TEU, down 0.5% year over year; September at 2.12 million TEU, down 0.8%; October also at 2.12 million TEU, down 4.1%, and November at 2.06 million TEU, down 2.5%.

Importers have been “front-loading” orders well in advance of their routine summer and holiday shipping schedules. New goods are arriving at a time when existing inventory is taking longer to turn, leading to more congestion at ports, rail yards, and warehouses.

Look East

It’s not unusual for importers to use East Coast and Gulf Coast ports for less time-sensitive shipments in the summer and then use ports on the West Coast for shipments closer to the holiday season. The difference this year is that imports to the East Coast began arriving even earlier with shippers seeking to work around congestion and potential labor issues on the West Coast, and the traffic has continued through the summer.

As I write this in mid-July, there are more vessels queued up waiting at anchor at Savannah, Ga., then in Los Angeles. Import volumes at New York ports increased 6% in June and were up 19% year over year. Volumes at East Coast ports in June were up 12% year over year compared to 5% on the West Coast. June volumes at Gulf Coast ports, including Houston and Mobile, Alabama, were up 9% year over year.

For truckload carriers, this means a repeat of 2021, when vessel congestion and surging import volumes at our largest ports made headlines. This pushed considerable freight volume into the spot market as intermodal and contract truckload capacity overwhelmed container volume. We expect this to occur again this year but more on the East Coast based on current trends.

High costs in California

Lower container volumes last month at the Ports of Los Angeles and Long Beach translated into fewer loads posted to the spot market during the first two weeks of July. Load-post volumes in Los Angeles were down 23% month over month.

Some outbound lanes were higher, however. Los Angeles to Chicago is a lane where truckload

carriers can compete with rail intermodal when shippers are willing to pay a little more for better service. The number of loads moved on this lane has been rising and spot rates averaged $2.47 a mile during the second week of July, up 5 cents from the June average. However, taking an amount equal to a fuel surcharge out of the equation, L.A. to Chicago averaged $1.75 a mile during that period. That’s more than $1 less than the rate without fuel a year ago.

California has two wrinkles that may take the balance of the year (or longer) to iron out: the contract between the International Longshore and Warehouse Union and the Pacific Maritime Association has expired, and drayage owner-operators are staging protests over the implementation of AB 5, California’s worker classification law.

Space: The final frontier

A shortage of labor was a major factor in the supply chain inefficiencies during 2021; today, it’s a shortage of labor and space.

The industrial vacancy rate has fallen as low as 0.5% in the Los Angeles are and lease rates for warehouse space in the county are now the highest among metropolitan areas in North America, according to data from commercial real-estate firm CBRE.

Tight warehouse capacity affects supply chains further upstream. For instance, executives at Class I railroads are getting more vocal about shippers letting import containers sit in rail and marine terminals because they don’t have space to put the inventory.

“The last mile of the supply chain must have the capacity to take the freight once it arrives at our inland facility,” Kari Kirchhoefer, Union Pacific Railroad’s vice president of marketing and sales, and Jon Panzer, UP’s senior vice president of intermodal excellence, wrote in a June 30 blog post. “That means having the necessary truck drivers to get containers to distribution centers and having the necessary labor and capacity at warehouses to unload those containers as soon as possible and get the empty container with the associated chassis returned to the terminals.”

Truckers, meanwhile, are feeling squeezed. It’s harder for independent owner-operators and small carriers to make a buck these days, given higher fuel costs, and generally weaker spot rates.

When you’re paid by the mile, delays and congestion only compound the pressure.

Dean Croke is the principal industry analyst at DAT Freight & Analytics, which operates the industry’s largest load board network and the DAT iQ data analytics service.