What 2020’s volatile freight market means for 2021

Uber Freight is tracking the freight industry’s changes throughout the COVID-19 pandemic, identifying market patterns to help carriers and shippers stay informed. From demand imbalances in early 2020 to a shrinking truck supply and unprecedented seasonal spot surges, here’s a look at our data throughout 2020 and expectations for 2021.

Pandemic onset: stockpiling and an imbalanced freight market

When the World Health Organization officially declared a global pandemic on March 11, 2020, the US freight market immediately felt the impact. Consumers scrambled for essential goods like food, medical, and cleaning supplies, causing spot volume to jump 250% month over month in March.

Demand for essential consumer packaged goods and food and beverages spiked, causing unseasonal tightness. The strain on carriers was particularly acute because of an imbalance between inbound and outbound loads, increasing the need for load-bundling technology to cut empty mileage. Drivers’ struggles took a toll on facility experiences: dwell times lengthened by 9% in the first month of the pandemic.

Staying at home: rates bottom out as consumer demand declines

By April, governments began stay-at-home orders around the country. Demand for essential goods declined and nonessential spending stayed low as unemployment reached 15% (including nearly 90,000 trucking jobs lost). The spot market slowed as a result, dropping 40% month over month to near-pre-COVID levels. Dwell times began returning to normalcy, and Uber Freight saw facility ratings rise.

Demand picked up in May and June as produce season began and states eased stay-at-home mandates. Van volumes rose 23% by early summer, providing carriers with some relief from their March-April dry spell and leading more shippers to adopt digital tools to remain flexible and efficient. Uber Freight’s API volume was up by more than 100% compared with before the pandemic.

Sustained rate rebound: carriers capitalize on surging consumer demand in a tight market

Nonessential spending was erratic by midsummer, and the market further tightened around the Fourth of July. While the holiday typically leads to tapering food and beverage demand, last year it gave rise to uncharacteristically high volumes as people opted for grocery stock-ups over restaurant visits. Van rates followed suit, rising 15% in July (compared with a 5% drop in 2019) and another 8% in August.

Shippers turned to spot opportunities to keep up with consumer demand. Reluctant to enter long-term contracts, carriers took advantage and increased their spot rates by 31% in July. The spot market kept rising through August (volume increased by 15%) as natural disasters created another essential-goods rush.

End of 2020: the market returns to seasonal trends

The tight freight industry began trending toward recovery after a summer of ever-increasing rates. As shippers and carriers prepared for the holiday season, facility dwell times dropped by an average of about 1.2 minutes and van rates increased by only a moderate 5% in September. With lighter load-to-truck ratios, spot opportunities fell an average of 17.2% during a seasonally loose October, and van rates decreased for the first time since midsummer.

Thanksgiving volume was still up 79% year over year, but volume fell month over month in November and was flat in December. In the context of an abnormally tight year, that indicates a local stabilization of seasonal rates and a return to the cycles shippers usually expect around the holidays. However, until demand across all sectors returns to pre-pandemic levels, we’ll continue to see a shifting impact on the freight industry into 2021.

Looking ahead 

Last year put the freight market’s resiliency to the ultimate test. Consumer demand was volatile, but adoption of real-time digital brokerage technology helped carriers and shippers weather the storm. We’ll continue to see the impact of these trends in the new year as we expect an especially tight market in H1.

Consumer demand shifted from services to goods (vehicles, furniture, home equipment, off-premise food and beverage), and this trend will continue in H1 until COVID-19 vaccine administration allows in-person service industries to resume. After dropping precipitously during the pandemic, retail inventory-to-sales ratios will likely remain flat and not increase materially until the broader economy opens up around Q2.

On the supply side, drivers will be relatively scarce and capacity will continue to tighten. Wage increases are not expected to materially increase the driver pool in the near term, and barriers to new driver entry remain high. 

Uber Freight will remain at the forefront of carrier, shipper, and digital transformation trends in 2021. Stay tuned for more market insights to come.