Dry Van Report: Warehouse inventories at record levels – DAT Freight & Analytics

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Because the headlines proceed to name out potential recession fears, the Logistics Managers’ Index got here in at 60.7 in July, down from June’s studying of 65.0. That is the bottom studying since Might of 2020 and the second consecutive studying beneath the all-time index common of 65. This month’s studying nonetheless represents a wholesome price of enlargement, nevertheless, the transportation metrics are the driving pressure behind the downward shift. 

The Transportation Costs Index got here in at 49.5 in July and with a studying beneath 50.0, displaying a state of contraction for the primary time since Might of 2020. The survey additionally highlighted the elevated capability with progress within the accessible Transportation Capability Index coming in at 69.1 which jumped 7.4 factors from the earlier month and reached a brand new 3-year excessive. The Transportation Utilization Index was up (+0.9) barely to 59.3, marking 27 consecutive months of progress for this metric. Through the second quarter, truck shipments have been truly up 2.3% from the primary quarter and plenty of bigger fleets are predicting favorable situations by means of the second half of 2022.

A scorching matter has been the will increase in retail stock ranges, the report’s Stock Degree worth is 68.8, down (-3.0) from June’s studying of 71.8, and down considerably (-11.4) from the index’s all-time highest worth recorded this March.  The LMI report highlights indicators of a slowdown in what had been out-of-control stock progress as the present worth is a mere 2.4 factors increased than the identical time final 12 months. Seasonally talking, inventories are rising solely barely extra shortly than one 12 months in the past. 

On the subject of stock,  Zac Rogers, an assistant professor of operations and provide chain administration at Colorado State College and co-author of the LMI mentioned, “We have now seen inventories climb at an unprecedented price during the last six months. What that actually has to do with is the truth that provide chains are so long-tailed—longer tailed now than they actually must be due to issues like shutdowns at Shanghai, congestion at ports, and overcrowded warehouses. Every part is shifting extra slowly. What I maintain listening to from people is that no matter your regular lead occasions are, you may count on them to basically triple—in order that what would sometimes take 90 days to supply now takes 270 days. These are actually lengthy lead occasions, and the inventories that we see now replicate an financial system that not exists. They replicate the financial system of 2021, after we had actually scorching client spending.”

All charges cited beneath exclude gas surcharges until in any other case famous.

Within the six main intermodal freight markets (Los Angeles/Ontario, Dallas, Kansas Metropolis, Joliet, and Chicago) impacted by congestion and capability points, truckload spot charges elevated by $0.03/mile final week. On the intermodal-heavy lane from Los Angeles to Chicago, dry van charges elevated to $1.82/mile or $0.11/mile increased than the July common. Additional inland within the Joliet market, the place the CenterPoint Intermodal Heart (CIC) is positioned, the biggest inland port in North America, spot charges elevated by $0.07/mile to a median outbound price of $2.31/mile. Load put up volumes have been up 6% w/w ensuing within the reversal of charges tendencies in July, which had declined for the prior three weeks.

Hundreds from Joliet to Worcester, MA, the place one other central intermodal hub is positioned, have been paying $0.35/mile increased final week at $2.86/mile. Truckload capability was very tight on the Joliet to Dallas lane, the place spot charges elevated by $0.53/mile over the July common to $2.32/mile final week. Spot charges on the Joliet to Elizabeth lane have been additionally up by nearly $0.20/mile to $2.53/mile final week. Hundreds from Elizabeth again to Chicago have been flat final week at $1.51/mile, whereas hundreds south to Atlanta have been up barely to a median of $1.62/mile. Flash flooding and highway closures alongside the Mississippi River in the previous couple of weeks resulted in capability being in brief provide within the Quincy, IL, market. Dry van charges jumped $0.18/mile final week to $2.35/mile after declining for the three weeks prior – load put up volumes additionally elevated by 20% w/w. 

Load put up volumes fell predictably in the course of the first transport week of the month – down 8% w/w and nearly 33% decrease than final 12 months. Provider tools posts elevated 4% w/w and at the moment are simply 3% increased than 2019, which was not an excellent 12 months for truckload carriers because the market grew to become over-supplied. On account of decrease load posts and better tools posts final week, the dry van load-to-truck (LTR) decreased by 11% to three.59, or nearly the identical as 2017 LTR ranges. 

Nationwide common linehaul charges excluding gas are holding their very own after remaining flat final week at slightly below $1.97/mile. In comparison with DATs High 50 lanes, which averaged $2.36/mile final week, the nationwide common was $0.36/mile decrease final week. Dry van linehaul charges are additionally $0.44/mile decrease than the earlier 12 months, $0.10/mile increased than in 2018, and nonetheless $0.35/mile increased than the common of pre-pandemic years.

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