Winter storms blow freight market back into disarray
Winter weather retightens domestic trucking capacity even as demand drops 4,666 4 minutes read
Chart of the Week: Outbound Tender Reject Index, Outbound Tender Volume Index – USA SONAR: OTVI.USA, OTRI.USA
The recent string of winter storms and cold weather that has gripped the central U.S. disrupted shipping across the country in a way that is somewhat counterintuitive volumes fell while capacity tightened.
The Outbound Tender Volume Index (OTVI) a measure of shipper requests for truckload capacity fell over 6% last week while the Outbound Tender Rejection Index (OTRI) the rate at which these requests are rejected by carriers jumped to near-peak-season levels in mid-February. Declining carrier compliance is tightly correlated with increasing shipping costs. These events are extending the effects of the shipping boom that resulted from increased consumer demand for goods last year.
Shippers take to the sky as ocean congestion grows
Supply chains have fractured under the weight of recent import demand, forcing shippers like Peloton (NASDAQ: PTON) to find pricier alternatives in order to not miss their window of opportunity. Judging from FreightWaves’ new Inbound Ocean TEU Volume Index (IOTI) and the recent Transportation Air Cargo Index (AIRUSD), that is not the only company choosing to fly versus ship goods over the Pacific.
The import boom appears far from over, and it will have implications long after this wave of unprecedented orders subsides. The trans-Pacific trade route has been overwhelmed over the past year as consumers divert their attention to spending on durable goods over travel and leisure services while they spend more time at home.
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This is an excerpt from Monday s Point of Sale retail supply chain newsletter.
We are entering a highly anticipated earnings season, especially for consumer and retail companies. Most analysts will be looking at the nation s largest retailers to understand how the consumer behaved in the last few months of year. For me and my fellow supply chain nerds, we want to know how many blame freight and shipping costs for missing guidance.
Since there s only been one major retailer to hold a call, surely no one yet has pointed to transportation costs for missing earnings… Wrong.
Bed, Bath & Beyond (NYSE: BBBY) posted earnings per share (EPS) of 8 cents for the fiscal third quarter, which is less than half the consensus estimate of 20 cents. Of course, BBBY suffered from dismal store in-store traffic, as many other retailers did. According to Placer.ai, BBBY has experienced average store traffic down more than 20% since the summer. But BBBY was able to offset much of this tra