From Panic-Buying to Lockdowns of Eateries & Manufacturing: Truckers, Railroads Face Supply Chain Turmoil, Spikes & Plunges
“There has been a clear divide between winners and losers.”
Panic buying in late February and March was followed by a sudden shift in consumption in mid-March away from restaurants, schools, college campuses, office buildings, other work locations to supermarkets, warehouse clubs, and ecommerce. For weeks, brick-and-mortar retail supply chains failed to keep up, and bare shelves in some product categories became a common sight. But the supply chains at the other end of the spectrum ground to a halt, stuck with goods that had no place to go.
This divergence has shown up in the trucking business. March was busy for truckers hauling dry-van trailers and refrigerated trailers (reefers). The Van Load-to-Truck ratio in the spot market surged by 56% from February and by 84% from March last year, according to DAT Trendlines. The Reefer Load-to-Truck ratio surged by 45% from February and by 91% from March last year.
But in April so far, all this has unwound. In the week ending April 12, the Van Load-to-Truck ratio plunged 44% from a week earlier. For the past two weeks, “Van spot freight volumes lost 20%,” DAT reported, “and national average rates lost 8¢ per mile, to $1.78, reflecting declines all over the country.”
“Reefer trends weren’t much better,” DAT said. The Reefer Load-to-Truck ratio plunged 42% over the week ended April 12, compared to a week earlier. “It’s been an up-and-down kind of market for reefer equipment,” DAT said in a blog post on April 9. “We’re not talking about a gentle rise and fall – more like a giant roller coaster.”
But it’s a very dynamic market, with reefers getting switched from the shut-down food services industry (such as restaurants and schools), to haul produce for the grocery supply chain:
Luckily for reefer carriers, there are still some markets and lanes where spot rates are rising. That’s because more fresh produce is coming into season, just as other refrigerated foods are being re-supplied to grocery stores at a more normal cadence. Produce season bolsters rates to some degree, but rates also face downward pressures because of the sharp decline in food services.
Trucking companies that used to service fast-food chains and school cafeterias are more temp-controlled trucks available to move whatever needs moving, so capacity is expanding while the level of demand is not going to change all that much. Everyone is still eating, even though the dining table is at home instead of in a restaurant........MUCH MORE
Those last three paragraphs are something we've been seeing in the packaged goods sector but truth be told I didn't even think of fruits and vegetable.
See this morning's "How Covid-19 is impacting various points in the US food & ag supply chain":
Well...for one thing you're seeing some empty grocery shelves not because of food shortages but because so much food was shipped to restaurants in large containers that, with restaurants closed there is still demand for those foods but packagers haven't been able to shift to smaller "family-size" or "individual' containers.
Strange little bottlenecks popping up all over.
