After 52 weeks above the pre-pandemic record, unemployment claims fell to 684,000 the week ended March 20. The four-week average for jobless claims, which smooths out volatility in the weekly figures, also fell to a pandemic low of 736,000.
As workers become more comfortable and consumers return to restaurants and shops these numbers should steadily improve going forward.
Recent analysis from BMO Capital Markets that indicates American households have saved a whopping $1.7 trillion in 2020 and early 2021. There is a pent-up demand to spend. Bob Costello, ATA economist, points out that if consumers spend that extra cash, it would be enough to power three years of normal consumer spending, which averages more than $500 billion a year.
Retail spending stumbles due to weather in February
Adobe Analytics reports U.S. online retail sales of $121 billion in January and February, up 34 percent from the previous year. The rest of retail didn’t fare as well.
U.S. retailers and manufacturers slumped in February due to winter storms and supply-chain disruptions, but a broader economic rebound appears poised to accelerate this spring.
Retail sales, a measure of purchases at stores, at restaurants and online fell by 3 percent in February compared with the prior month, according to the Commerce Department. The decline followed robust January sales that were propelled by stimulus payments to households from the December pandemic-relief package. January sales advanced a revised 7.6 percent, up from the earlier estimate of a 5.3 percent increase.
The Federal Reserve separately said industrial production fell a seasonally adjusted 2.2 percent in February compared with January. Manufacturing, the largest component in the industrial-production index, drove the decline because of the weather disruptions and supply shortages in semiconductors for autos, the Fed said.
Despite the February decline, retail sales were up 6 percent over the last three months compared with the same period a year earlier.
JPMorgan Chase & Co.’s tracker of credit- and debit-card transactions showed consumer spending on a seasonally adjusted basis climbed in early March after dropping off in February.
Home sales slow, inventory shortage
The record-low number of homes on the market is limiting purchases heading into the spring selling season.
Home sales typically slow in the winter before climbing in the spring, as families try to buy homes and move before the start of a new school year. For-sale listings of previously owned homes usually rise in February.
There were 1.03 million homes for sale in the U.S. at the end of February, unchanged from the revised January level, which was the lowest in data going back to 1982, according to the National Association of Realtors. The level was down 29.5 percent from February 2020, a record annual decline, according to NAR.
The inventory shortage was the key reason why existing-home sales dropped 6.6 percent in February from January to a seasonally adjusted annual rate of 6.22 million. It is not that demand is disappearing from the marketplace. It is really the lack of supply.
The February sales marked a 9.1 percent increase from a year earlier.
Freight market now & how we got here
Much of the cause of the current trucking capacity shortage comes down to a lack of drivers. There isn’t a fleet anywhere that doesn’t have tractors parked because of a lack of drivers.
The Bureau of Labor Statistics (BLS) data shows short-haul or local trucking employment is recovering much more quickly from the COVID-19 pandemic-driven recession than long-haul truckload employment.
Trucking is losing potential younger employees to warehousing jobs. Nearly 57 percent of all truck drivers are more than 45 years old, and 23 percent are over 55 years old, while 62 percent of warehouse workers are younger than 45.
Unadjusted warehousing employment rose 10.9 percent in 2020, BLS data shows while for-hire trucking employment, by comparison, dropped 2.8 percent year over year in 2020. By February, the number of trucking employees tracked by the Labor Department agency was 45,600 lower than in February 2020.
On the surface, all is well in trucking as a sustained period of high demand outpaces supply, driving rates ever higher. Both less-than-truckload and truckload carriers have more freight than they can handle in what is widely being described as a “carriers’ market.”
DAT Truckload Volume Index reports demand for truckload capacity tightened as contracted carriers struggled to fulfill service commitments. Freight pricing jumped with national average load-to-truck ratios for dry van and refrigerated freight hitting record highs in February as severe weather across much of the United States distressed supply chains and disrupted transit times.
The DAT Truckload Volume Index, a measure of dry van, refrigerated (“reefer”) and flatbed loads moved by truckload carriers, declined 9.8 percent from January to February, reflecting a reduction in freight movement for the month.
However, demand for truckload capacity tightened as contracted carriers struggled to fulfill service commitments. During the week of Feb. 21, DAT achieved record network volumes with more than 10 million loads posted, an increase of 42 percent from the previous high recorded in June 2018 and a 174 percent improvement over the same period in February 2020.
The DAT market outlook in March is for spot rates and truckload freight volumes to fall from record highs but remain elevated as they track a more normal pattern of activity. Strong import volumes continue to put pressure on supply chains as shippers try to replenish their inventories.
Produce season approaches and demand for refrigerated trailers will continue to build as shippers move domestic and imported produce. Supply chains are adjusting to more than $600 million in weather-related agricultural losses across Texas, including citrus crops; cold- and warm-season vegetables; livestock grazing materials such as oats, rye grass and triticale; and landscape plants, according to agricultural economists at Texas A&M University. The start of produce season in southern Florida will further tighten capacity.
In the week ending March 20th, dry van spot rates continued to climb, but there is some resistance to prices going much higher. Van volumes cooled off again last week and are now the closest they’ve been this year to 2020 volumes. In contrast, the reefer market stayed flat with little change in volume, capacity and rates. Flatbed rates and volumes continued climbing as if it were 2018 all over again.
Current National Average Dry Van Spot Rate: $2.67 per mile as compared to $2.40 in February and $2.36 in January.
Rail volume rises as intermodal volume jumps
Total U.S. freight-rail traffic rose 12.5 percent during the week ending March 13 compared with the same week a year ago, according to Association of American Railroads (AAR) data.
U.S. railroads logged a total of 230,684 carloads, a 2.1 percent increase, and intermodal volume of 290,052 containers and trailers, a 22.4 percent increase, compared with the same week in 2020.
For the first 10 weeks of 2021 compared with the same period in 2020 U.S. railroads reported cumulative volume of 4,980,025 carloads and intermodal units, up 2.7 percent.
At Wagner Logistics
I’m enjoying the warmer weather and rainy days. I’m looking forward to knocking the rust off of my golf game and watching baseball again. I hope that you too are getting out to enjoy the springtime.
Wagner continues to work its many projects and would love to work with you. If you are issuing a transportation RFP or have a distribution/fulfillment project, let’s schedule a call.
We are celebrating our 75th year of history of service to our customers and would relish the opportunity to collaborate with you.
As we say every day, Bring it!
Have a great day!
John Wagner Jr.
About Wagner Logistics
Wagner Logistics was founded in 1946 on the principle that every customer is a big deal and that continues to pervade our mentality, producing a superior customer experience. The company began in trucking and remains dynamic offering top-notch transportation, dedicated warehousing and robust fulfillment services. We strive to produce innovative solutions, in addition to our superior onboarding process which makes transitions seamless, and have been honored 20 years in a row by Inbound Logistics as a Top 100 3PL. Our customers drive our entry into new geographic markets, technological advances and ever-changing distribution challenges. Where do you want to be? Wagner says, Bring It!