E-commerce kills efficiency as carrier miles decline
Story by: Zach Strickland, FW Market Expert & Market Analyst @ FreightWaves.com
Chart of the Week: Average Length of Haul – Company and Leased Fleet Dry Van Carriers, Retail Sales –
Online and Mail Order SONAR:ALOHA.VCFOO, RESL.ONLN
This year’s Black Friday and Cyber Monday shopping extravaganza were record-breaking in terms of online sales. Both Thanksgiving and Black Friday showed huge y/y increases in online sales revenue, with 14.5% and 19% increases respectively. The e-commerce giant, Amazon, called this past Monday the biggest shopping day ever. National online sales have grown by double digit percentages every month in 2019 through September according to the monthly Census Bureau reports, while department store revenues have displayed y/y contraction in each month. The impact to trucking has been palpable.
According to the Truckload Carrier’s Association (TCA) the average length of haul for dry van carriers has dropped 8% on average since the fall of 2017, an indication that distribution and production centers are moving closer to the final consumer. What does this mean for carriers moving into 2020?
The rise of e-commerce has been well documented. Most everyone has heard the buzzword or phrase “the Amazon Effect” so many times it has lost all meaning. Love it or hate it, Amazon has created an environment where the consumer expects his or her orders in a day or two, making the traditional brick and mortar experience less alluring. This means if other retailers want to compete, they will need to be up to speed, literally, with the competition.
Shorter moves are driving volumes into late 2019, as longer haul freight declines. Image: SONAR – National Length of Haul Volume Indices
According to FreightWaves Outbound Tender Volume Index, truckload volumes have been above 2018 levels since late July, averaging roughly 3% higher. A large portion of that increase was in short-haul freight moving under 250 miles from origin. Loads moving 1 – 99 miles were up over 15% y/y, while loads that moved 100 – 250 miles were up roughly 8% over 2018 during the same period. Freight that moved in the “tweener” mileage band of 450 to 800 miles declined 5.8% during this period. Effectively, there are now more loads moving with less miles.
Story continues HERE @ freightwaves.com
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Source and credits: freightwaves.com / Zach Strickland/ iTrucker / Mario Pawlowski