Beyond The Road (The Transportation Industry Podcast)
Ep. 18 | October Market Update: What You Can Expect Logistics to Look Like This October
Sep 20, 2022Season 1Episode 18
Anderson Trucking Service (ATS)
Over the years, October has become synonymous with things like pumpkin pie, Sunday Night Football and piles of leaves begging for the chance to become a playground of color into which children tumble.
Don’t worry though, you won’t miss out on all the fun. You see, during its 31 days, October also brings mounds of excitement to the transportation world — creating new roadblocks and challenges for logistics managers to navigate.
And, although the leaves outside transition into the beautiful crimson reds and yellows we’ve come to love, your transportation dollars are still just as green as they were in previous months. As such, you’re looking to take them just as far.
Let’s make sure you do.
In this episode of Beyond The Road, we take an in-depth look at what October means for the transportation world and go over what you should keep in mind in the days ahead. . .
Over the years, October has become synonymous with things like pumpkin pie, Sunday Night Football and piles of leaves begging for the chance to become a playground of color into which children tumble.
Don’t worry though, you won’t miss out on all the fun. You see, during its 31 days, October also brings mounds of excitement to the transportation world — creating new roadblocks and challenges for logistics managers to navigate.
And, although the leaves outside transition into the beautiful crimson reds and yellows we’ve come to love, your transportation dollars are still just as green as they were in previous months. As such, you’re looking to take them just as far.
Let’s make sure you do.
In this episode of Beyond The Road, we take an in-depth look at what October means for the transportation world and go over what you should keep in mind in the days ahead. . .
Over the years, October has become synonymous with things like pumpkin pie, Sunday night football, and piles upon piles of neatly collected leaves, begging for the chance to become a playground of color into which children tumble. Don't worry, though, you won't miss out on all that fun. You see during its 31 marvelous days, October also brings mounds of excitement to the transportation world, creating new roadblocks and challenges for logistics managers like you to navigate. Although the leaves outside transition into the beautiful crimson reds and yellows that you've come to love, your transportation dollars are still just as green as they were in previous months. So you're here looking to take them just as far? Let's make sure you do. In this episode of Beyond The Road, we'll take an in depth look at what October means for the transportation world and go over what you should keep in mind in the days ahead. Stick around. Welcome back to another episode of Beyond The Road, the transportation industry podcast where we talk all things transportation and logistics. Joining me today for a market update is Josh rivers. Josh is a sales team manager with ATS logistics. We've heard from Josh a couple of other times. I think he went over August, he went over September. Now around October, things change in trucking markets in October, perhaps we will find out now, Josh, thanks for joining me.
Josh:
Thanks for having me again. I look forward to these, I really do.
Eli:
Yeah, it's always nice to have you on you always bring some valuable insights for the listeners. And yeah, these are these are popular episodes. You know, people like to know what's coming up in the markets, make sure that they are planning accordingly.
Josh:
Yeah. Yeah. Glad to help. I'm glad they're popular. It's nice to know, I'm not just speaking into the ether. People are actually finding some value in this.
Eli:
Yeah, it's nice. It's nice to do these. They're fun to do. It's fun to hear your expertise. So let's kind of jump in Josh.
Josh:
Sure.
Eli:
What happens in October? What happens to trucking in October, transportation?
Josh:
So as usual, I, I spoke to Jerry and Amanda just to get a little bit more insight. And like, I typically do compile it with my own experiences. October is from the flatbed perspective, we'll start there, you can expect probably a little bit of a slow start due to the end of quarter. So end of quarter people are going to do some inventory. And this kind of applies to both sides. Honestly, for vans and flatbeds. After an end of quarter people tend to do inventory. So it's going to it's going to slow down a little bit. So in theory rates should follow, right. So if if freight is slowing down, and there's not as much freight moving, people are more likely to take lower rates just to keep the truck moving and making money. This This won't last forever. I think probably that first probably the first couple business days of October and it might be slow but then I'd expect it to pick back up from the flatbed side of things because this is the this is the last chance to get as much open deck freight done before the snow and the cold hit. So if it has to go for a construction purpose or if it has to go for for anything that's that's going to be based on weather, it has to go now because living here we can speak to it November is is typically it's cold we can we it's cold, and sometimes it snows and anything that's going to be done outside is going to likely be concluded in October. So this is the last chance to get that kind of freight out and moving. Most of your construction through the Midwest is wrapping up in October. I believe we touched on that in the September podcast but this is when it's going to be wrapping up right now the last you know finishing touches and if it's not done now it's going to wait until springtime which makes me nervous living in Minnesota because you see how many traffic cones are still out. Here we go ahead and and October started.
Eli:
It felt like October kind of this weekend a little bit.
Josh:
Yeah. And it's supposedly it's going to start really feeling like it later this week. I think it's supposed to be at one tomorrow and then it's the highs are low 70s. High 60s For the rest of the week. Yeah. Which is great. I love it because that's bonfire sweaters my kind of my kind of time. . .
Eli:
Yeah, so you start to see in October in trucking markets you start to see like it's like just a fall off in volume of open-deck freight?
Josh:
I think you'll I don't know if we'll see the fall off yet. I think the fall off will come the following month.
Eli:
Okay.
Josh:
But they're like I said there's there's other things that are that are going to pick up to replace it. So it once the Midwest slows down, other things will pop off in other parts of the country that will keep open-deck drivers happy. Don't get me wrong in the summertime is definitely the best time to be an open deck driver because of the volume of construction materials and whatnot. That involves outdoor projects moving but it's it's not like it's, it's not like if you're a flatbed driver, you're gonna go broke in the fall and winter. It's but it doesn't work that way. But it is definitely the last gasp to get construction materials out and get outdoor projects wrapped up. So and then moving into the drive and sector. And this is kind of weird. You've heard me preach about it, the last couple episodes drive and freight is is cheap, or I should say cheaper than it was the past the past. Probably six months, it's just been a downward trend. And it continues to be so I, it's hard to get a pulse on what it's going to do in October, because it just continues this, this little bit of a decline to gauge it where it would be for like the harvest season and whatnot, because harvest season is going to be going full tilt, pretty much from now until until the start of November. So beets and potatoes are going to be huge, and that that's going to be through the Midwest and in Idaho, obviously for potatoes. So those are busy. That's that's going to be busy. How busy is it going to be? And how much is it going to affect rates? I don't know. Because it's, like I said, it's almost impossible to gauge it because despite what we say it continues trending down. So I don't want to sit here and tell people, you know, prepare for these massive increases involving harvest season, because they may not show up, I would say anticipate an inc a slight increase in rates because of harvest season. Don't be surprised if you don't see it very much played very much day by day, when it comes to drive and freight because as it stands, it's still the more affordable option if you can get it. And capacity is almost unlimited right now. So that's what the that's that's the biggest thing that I wanted to point out for driving freight, the the Southeast Florida is obviously still not ideal to go into. And that's going to be you know, Florida, Georgia, the South Carolina. In those areas. There's not a lot there right now. And it's I don't know, it's, it's typically going to be harder to get guys to go there. But we're finding drivers willing to go anywhere. So even the less than desirable spots, you're going to pay a little bit extra right now. But it's not nearly as bad as it used to be. And there's still guys that are going to take that freight, so guys are going to make those runs. So nothing I would I would worry too much about there. October is also the start of hurricane season. And that's when we need to start keeping an eye on the weather. So there's been a couple of tropical storms and hurricanes that have already flared up out the Pacific, or the Atlantic sorry, and haven't made their way to the states just yet. But it is something that's going to happen this year, obviously, and we need to keep an eye out for it. Those are the biggest things that are going to affect capacity. Yeah. And affect the timing of your shipments. There's nothing we can do about a hurricane. Yeah, there's no super truck made that's gonna drive through a cat three storm to get your load into Louisiana, Texas, Florida, Georgia does doesn't happen. It's a what it does do. And this is touching back on the open neck side is disaster relief provides a lot of freight opportunities for broken deck drivers. For crane mats to help with building dams to stem flooding, for relief materials. I mean, a disaster, unfortunately, requires truck drivers. So disaster areas, the immediate aftermath heading in there, you'll find a lot of a large amount of freight heading into those areas because of the the disaster relief efforts that will go on afterwards. And that'll that'll cause a hike, yeah, to rates because some of these Disaster Relief Societies pay really well to get you know, bottled water, medical supplies, like I said, crane mats, rescue materials, all that stuff into these areas that have been affected, and that can affect the rates for him. So that's something to keep an eye out on. But more more specifically, I feel like it would affect the the drive and market more so than the open deck side. in a negative sense. I think it affects the open deck side of it in a more positive sense because it provides more opportunities for free.
Eli:
Do we see hurricanes every year?
Josh:
That's a good question.
Eli:
Does it always come across your desk during Hurricane
Josh:
Yes. So now that you mention it, I don't really know season? if if one makes landfall every year I have a friend who lives in in Miami. And it seems like every year we talk about her having to batten down the hatches for a hurricane that's coming through. So my gut says yes, every year something's gonna make landfall now whether or not it's a category one with you know, heavy rain in some some 25-35 mile an hour wind gusts or it's this you know, relocate your house six miles inland cat five storm with you know, sustained 180 mile an hour winds? I don't know. Obviously the stronger ones are far more rare and frequent. But I it's definitely something we have to deal with every severe weather. It's something we deal with every season. Yeah, whether it be hurricanes or tornadoes or what have you. But this is the time of the year where hurricanes specifically will stand out. You know, we're we're through through pretty much the the peak season for tornadoes, or through the peak season for flooding for most parts of the country. And this is our next big act of God impact that we're going to keep an eye on. And then when we get into November, you and I will be talking about keeping an eye out for snowstorms. Come December, and keeping an eye out for cold snaps come January, February, you know, we'll we'll touch on those as we go. But this is the this is the hot topic of the moment. Another thing that might, that might heat up is people are gonna start ramping up for the wintertime. And one of those things that's gonna ramp up is salt for the road. So you might see a little bit of a squeeze coming out of Utah, which is where a lot of salt for road salt is made. And they're gonna start pumping that out like crazy now. So there might be a little bit of capacity squeeze out in that general direction, which is strange, because you typically don't see capacity restraints, because typically, there's not a lot of freight coming out of Utah. So if you're in Utah, and you want to get out as quickly as possible, so, but you might actually feel a little bit of a squeeze there. But like I said, the Van market, it's, I felt bad getting ready to come into this because I man, it's it is so hard to just get a pulse on it. Because we think, you know, we quote our customers. And we've had points where I were quoting customers, and I'm like, Man, that is that is low, we might we might lose some money on this. And we we wind up not. And so you know, you don't want to burn your customers and price yourself out of freight. But at the same time we're chasing rates going down can be just as difficult as chasing them up. Obviously, the risk isn't quite as high and when you're chasing them down as you are chasing them up. But it's it's difficult because you'll lose freight to competitors and other carriers. Because you're chasing this freight down and you're still trying to find the bottom. And we're still at that point, we're still trying to find bottom on van rates for some areas.
Eli:
Yeah, even even though we can maybe directly diagnose it now, can we just double click on what, what drives typically dry van rates up or down?
Josh:
Same thing that drives the rate of anything up or down supply or demand. So right now you have a lot of drive and drivers that are willing to haul freight pretty much anywhere. Yeah, and not as much freight being moved to keep these trailers full. So it was a different story a little while ago, not so long ago, as you would remember. Where I think the issue or the reason now is it feels like there's a little bit more drivers in the market. Whereas before, you know, with the the COVID scare and everything a lot of drivers got out of the market or when drivers would make such good money. When freight rates were at an all time high there, you could afford to take, you know, a week off here and there, because you're making a killing was the freight that you are moving. And I don't think that's happening as much now. So drivers are more consistently back in the market more consistently back in the pool of available drivers. And I just think we have more drivers available now than we did. As for the freight slowdown, I don't have metrics in front of me that say, you know, this many tons of this commodity have moved in the past six months. But in the past two months, it's only been this many tons of that commodity. I can't speak to whether or not there's been a slowdown in manufacturing, my gut says yes, yeah, because of us still chasing rates down. And well, I think drivers are a big part of it. I think it's also commodity available ship. And we can see that as as brokers on our end. And we see that from our customers, when the available freight to quote is reduced, we see that we have a building products manufacturer that we work pretty closely with. And the volume of freight that we see from them is is a fraction of what it used to be. So from an open deck standpoint, we have seen a decrease in available freight, it might just be specific to that particular particular field, or that particular commodity. But for the most part, I mean, in some areas, we have seen a reduction in freight.
Eli:
I think a lot of that is probably you know, driven by consumer spending. I don't know what the what the exact figures are right. But it's something like 70percent of the U.S. GDP is driven by consumer. Consumer spending. And as we're entering October, we're thinking about retail season, we're think about the holiday season, does that start to impact markets at all at this point? Or. . .
Josh:
Is it it's gonna start whether or not it's going to impact markets right away? I don't know. I don't believe so. Not yet. November is when we're going to start talking about Okay. People are really going to start diving into the retail season. That's when all the Christmas shopping gets done and people start in October. Yeah, I think I mentioned that on the last episode. People will start, you know, Christmas shopping and what have you in October, but it won't be as massive as it will be in November and December, November December are going to be your massive retail seasons Black Friday. At a last second Christmas shopping, all the hot toys and commodities that people want are going to be flying off the shelf and they're going to be those manufacturers are going to be pushing to restock them, you still won't be able to find the PlayStation five it's been years I've given up on it at this point, man, I sign up for the letters, the reminders, and if I don't have one by November, then it's over. Because every, every mom's gonna want to get one for their kid. And there's not a chance I'll be able to put that kind of time into refreshing the Amazon availability to catch one. So cool. Yeah. Back on the back on topic there. Yeah, that's that's, I wish there was more info to have for people right now. Yeah. And the reality is, is that there just really isn't it's a it's an interesting time to be in transportation simply because of this inability to kind of tell what's coming next. And I feel like I've been repeating that ad nauseam the past couple episodes. But the every time we've done this, I've at least had an idea, you know, we're not really sure what's coming. But this is what we think we're not really sure what's going to happen. But this is what we can project. And right now, it's I mean, the amount of available trucks and the amount of available capacity and the rates that we're seeing. I mean, it's now is a better time than ever, in the past few years to be a shipper, because the costs are near the bottom, I mean, almost three years, I'd say at this point. So if you're going to move into it now, that's the best thing, that's the best advice I can give people is, you know, there's there's really no reason to hold off any more on moving commodity or moving product if you're waiting for a better time to ship. I mean, this is it.
Eli:
Yeah, so is this an opportunity to lock in longer term, like contracts on high volume lanes?
Josh:
So it's funny, you mentioned that, because we've dealt with a bunch of RFQs, for the first time in what seems like forever, this past the past couple of months, because customers have the confidence in the market now, to bid these rates out for six months a year, and have confidence that it'll it'll go, it'll cover, I still recommend don't go more than six months, just be you're gonna make life a lot easier for yourself and for your carriers. Because when you price out for over a year, there are so many factors that impact a market produce seasons, harvest seasons, construction seasons, where markets are very hot, and then they're very cold. And as a carrier, we have to try and find that sweet spot where, okay, I want to haul this for you, I want to win this freight for the year. But I have to be very careful because this lane in you know, January through April, May cost, you know, I may wind want to charge you $2,200. But then April through September, I might have to charge you $3,500 Because that's what the market demands going into that area or coming out of that area. And you have to be very careful with that. So that's why I recommend try and do if you can do three month intervals. That's great. Because you, you'd be hard pressed to find a carrier who could not hold a rate for three months, six months, it's doable. And it's it may make it a little uncomfortable at the tail end or the middle or the end. But you should be able to hold it a year. It just it gets hard to effectively price something and you're just going to bring on issues. I mean, you're going to have carriers knocking on your door at in the middle of a produce season saying oh, you know, I know we quoted you this for the year. But it's practices and you got to understand the rates of change. And if you just want to avoid that conversation altogether, just do quarterly bids.
Eli:
Any other tips for October? Tips for planning?
Josh:
From a planning standpoint, say messages I've always told it's, it's better to have time, time is your ally. And if you can't get time get money. But we're in a position right now in a market that is quite healthy for customers. And I would say last second freight isn't the last isn't the worst thing in the world that it used to be. So from planning perspectives, if you have freight that needs to go next day or if it has to go same day even toss it out there. You might be surprised at the rate you get back. Yeah, it's a good time to be a shipper right now.
Eli:
So it's tough for transportation companies, but like how does like is it important at this time to be working with carriers that are, you know, more financially stable?
Josh:
I would say yes, because market direct turndowns like this always lead to smaller carriers closing the doors or carriers who aren't very financially responsible, will close their doors because you know, they they ride high on those incredible rates that they've been getting, and then when reality tends to set back and they're just not ready for it, and they're not prepared and they won't be there. So, and this isn't universal to everybody. I mean, there are some, you know, four or five truck operations that have been in business for 20 years know what they're doing, by all means stick with them. I'm not telling you to get rid of the little guy not at all. Um, But just keep a couple of the the heavier capacity, the larger driven, more, more financially healthy, more financially strong, larger capacities, keep a couple of those guys in your network. Because when you need those same day shipments, if the if the mom and pop 5-10 truck operations are all booked up, we'll find those guys that are available. But just because of the large network that we have, and our ability to pay our drivers in three to five days people want to work for a brokerage if they if they want to work for a broker, they work for ATS. So it's because of the reputation that we have we pay drivers, we're going to work areas, there's no reason for him not to so keep a couple of the healthier, larger companies in your back pocket. And I'd even say you should have one or two of those as your primary go to, just because of the capacity that they bring.
Eli:
So, like you mentioned, I wonder if we're gonna start seeing like, owner operators or or you know small, call them one horse shows. Entering fleets again, you know, as we're, as rates are declining, but we still have, you know, heightened insurance prices, heightened maintenance. Yeah, and those kinds of things.
Josh:
The guys who want the access to that large, readily available freight, are going to are going to sign back up with companies as company drivers, whether they're owner operators, sign up to a company just to have access to the to the freight. That's up to them. But I think you'll see them trying to be a player with a company again, because larger companies bring that large book of business with them. So they're not going to struggle to find their own freight, it's going to be found for them. And this is also the benefit from for drivers to work with a reputable broker. And it it kind of draws groans from drivers because we can call spade a spade. Some brokers have really ruined the reputation for others in this industry. Whether they they lie to drivers about rates, they are slow to pay drivers outright refusing detention outright refusing layover you know, fine print here and there that says that they only get paid if they do this, whatever. As a driver, I strongly recommend work, especially now, work with a reputable broker, you don't even have to think that that's ATS I think it's ATS. But you don't have to think that just for your own sake, work with a reputable established broker, somebody that you trust, find a rep at that company that you trust and work with them. And just it's gonna get you the security that you're looking for. Where if you can't find if your customers, your direct customers don't have free for you. You can call them I'm empty on this day. Can you get me something? Yeah, and then do your best to not burn bridges with those people. Because right now, carriers are in abundance. So before your people were very slow to no load people drivers could get away with a lot, you know, but we just wanted people in our network because we couldn't find people to keep in the network. And now it's it is very easy to find capacity. So it's in your best interest to show up when you say you'll show up and do the job that you say you'll do.
Eli:
Yeah, it's all about relationships and reputation. That'll be important in October. So thanks for. Thanks for joining me again, Josh.
Josh:
Yeah, I guess I wish I had more. I really, really do. And I think we'll have more for November. Yeah. There's a lot that happens in November. We have a lot of holidays to talk about. We have a lot of retails talk to had to be had. And a lot of weather talks we had there November. So it'll be pretty content. Rich. I'll have another month with the data to get with you guys.
Eli:
It'll be interesting to see what October brings. Yeah. Hopefully rates keep going down for you. I hope so.
Josh:
I mean, for the consumer sake. I mean, it was just not sustainable there for a while.
Eli:
Right. All right. Thanks. You've been listening to Beyond The Road, the transportation industry podcast produced by Anderson Trucking Service. If you like what you heard here today, make sure to follow along wherever you listen to podcasts, so you don't miss our next episode. If you'd like to learn more about the trucking industry during October, including what changes in the drive an open deck over dimensional and reefer markets, check out our article linked in the show notes below which goes over these topics so that you can plan accordingly. Like Josh mentioned, now is an excellent time to start thinking about locking in those long term contracts. If that's something that you are considering as a company for your organization and supply chain, I invite you to check out the article linked in the show notes below which goes over the pros and cons of contract rates compared to those of spot rates. For more transportation industry content and information, head over to the ATS, Inc. Learning Hub at atsinc.com/learning-hub, linked in the show notes below. On the Learning Hub, you will find a comprehensive library of answers to transportation's most common questions in the form of articles, videos, podcasts like this one, case studies, downloadable tools and more. All created to help you become the supplier that always delivers for its customers. Finally, thank you for sticking with me. I hope to speak to you again soon on another episode of Beyond The Road (The Transportation Industry Podcast)
