Winter Olympics, Valentine’s Day… it’s February 2018! Still the beginning of the year, and we are all looking forward to the upcoming months and forecasting what 2018 will bring us in transportation industry.
Of course, every year is different. However, bad year or good year – there is always a certain pattern. According to this pattern, we forecast and plan for the whole year. So, what does this pattern look like?
It’s not a revelation that transportation industry is heavily dependent on supply and demand (just like other industries as well, but we are in transportation, right?). These two factors determine the capacity and the rates, or in brief – market conditions. Once again, it’s not a surprise for anyone that we are currently operating in a tight market due to a number of reasons we have already discussed in our earlier post.
Regardless of that, we are still likely to see the typical seasonal shifts in supply and demand. This is something you acknowledge and understand after your first year in the transportation industry. The freight volume is not stable during the year, and if a certain rate worked in February for a dry van – it most likely will not in May.
The intensity of seasonal shifts depends on the general market situation and the region you are looking at. Transportation professionals usually define 4 typical seasons in freight industry:
The Quiet Season (January-March)
Freight volume is down. The holiday season is over, and we are rolling into a new year. The weather is not shipping-friendly with low temperatures and snowed-in highways. The transportation industry is recovering from the hectic holiday shipping and slowly getting back on its feet. The freight volume is slowly picking up during the quiet season, usually showing an increase in March as we are getting closer to spring months.
The Produce Season (April-July)
Spring rolls around and the produce season is upon us. Freight volume is picking up after a few almost dormant months. Carriers have more loads to choose from and can allow themselves to be pickier. Therefore, the market tightens up, and shippers realize that finding a truck has become more challenging and the rates are going up. In certain regions, the capacity and rates change drastically for non-produce shippers, as carriers are massively switching to high-paying produce loads, for example, peaches in Florida, leaving other shippers desperate to move their freight. During this time, it’s crucial to research your regions of interest to understand how much you may be affected by produce.
The Peak Season (August-October)
Another busy season in the transportation industry. Overwhelming produce season is coming to an end, but the party goes on. Now it’s the time to prepare for the “back to school” and start planning out the upcoming holiday season. Sales are typically up and companies are actively shipping product in and out of their facilities to ensure they are all set for the holidays. The rates are still on the rise and the freight volume is at its peak.
The Holiday Season (November-December)
Holidays are upon us – Thanksgiving, Christmas, New Year’s. Shippers are rushing to complete their last orders and get everything in or out before holiday closures. The year is coming to an end as well, and no one wants to leave freight behind and drag it into the new year. Of course, it’s the time for vacation and being with family, but a few days before everyone leaves for long weekends are usually busier than ever as shippers try to ship out everything that popped up last minute, got delayed or overlooked.
This is a classic picture of a calendar year in the transportation industry, or the Four Seasons of Freight if you wish. Being aware of this pattern is a must for any transportation professional and helps forecast and stay on top of the market changes.