Shippers and carriers turn to the spot market as capacity remains tight

September 21 / US
Shippers and carriers turn to the spot market as capacity remains tight

In previous years, the freight market has typically loosened after an early summer surge, then tightened in preparation for spiking consumer demand during the holidays. This year, shippers and carriers navigated market imbalances throughout the spring. Even as those imbalances began to soften, capacity shortages and dependence on spot loads have become long-term trends, according to Uber Freight’s latest data and research.

In addition to an already uncharacteristically tight market, unpredictable natural disasters have increased regional pressures. Throughout August, temperatures soared in the West and back-to-back hurricanes hit the Southeast. The series of natural disasters meant spot rates jumped in key regions as networks scrambled to stock essential supplies, while shippers worked to reconcile consistent limited capacity with higher consumer demand.  

Rates continued to rise across modalities 

Rates increased across modalities and regions from July to August, ranging from a 5% month-over-month van rate increase in the Southeast to a 12% increase during the same time period in the Northeast. Overall spot rates increased an average of 8% from July to August. 

At the same time, seaports, specifically on the West Coast, reported a surge in container volumes in August, causing tightened capacity at ports and at inland distribution centers.1 This signals that retailers are working to keep up with current demand and prepare for a holiday surge, while grappling with how to source reliable capacity to meet their needs. To address this, Uber Freight rolled out Uber Freight Enterprise and Uber Freight Link to give shippers more visibility into their supply chains, control over their operations, and access to nationwide capacity, whether in the Uber Freight network or not. 

2020 average carrier rate changes month-over-month

Spot volumes spiked in response to natural disasters

Throughout the summer, we saw spot volume continue to rise month over month. Breaking that data down weekly, spot increases in August reflected natural disasters that ravaged the Southeast and the West. Shippers in affected regions worked to source essential goods, while carriers picked up spot freight to get relief loads moving. 

As California battled uncharacteristically early wildfires in August, spot volumes rose over 15% week over week in the first half of the month. After a brief dip in the third week in August, spot volumes continued to rise again at the tail end of the month. Hurricane Laura hit the Gulf Coast on August 26. During that week, spot volumes in the Southeast, specifically in Florida and Louisiana, increased 14.6% and 16.7%, respectively.

2020 average change in spot opportunities month-over-month

Dwell times stabilized despite the tight market 

Facility experiences remain stable with an average rating of 4.26, even as the market continues to tighten. From July to August, the average increase in dwell time was 1 minute, with the notable exception being the Northeast, where carriers experienced an average increase of 5 minutes.  

This is the fifth in a series dedicated to understanding supply chain pressures caused by the COVID-19 pandemic, drawn from trends Uber Freight is observing across our own marketplace. 

Uber Freight Enterprise and Uber Freight Link are now available to North America–based shippers. To learn more, go here.

1The Wall Street Journal, Logistics Report, September 10, 2020.

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