The National Association of Realtors (NARS) reports that in June, housing starts jumped 17.3 percent to an annualized rate of 1.19 million, the highest level since March. Both single-family and multi-family starts were robust. New starts were still 4 percent below June of 2019, but that was much better than the 26.3 percent and 20.3 percent year-over-year declines in April and May, respectively.

A sluggish U.S. housing market is staging a recovery amid the pandemic, shaking off high unemployment and a rising number of infections as buyers with pent-up demand seize on record-low mortgage rates.

Sales of previously owned homes rose 20.7 percent in June over the prior month to a seasonally adjusted annual rate of 4.72 million, the biggest monthly increase on record going back to 1968. The surge in existing-home sales follows other recent bullish indicators such as rising new-home sales, robust home-builder activity and a flood of mortgage applications.

Even with the jump in home sales, monthly activity remains well below levels that were seen before the spring lockdowns. June sales marked an 11.3 percent decrease from a year earlier. Many potential buyers remain on the sidelines, concerned about job security or the health risks related to visiting homes.

Factory output increasing

The Federal Reserve reported that factory output jumped 7.4 percent from May, while still contracting 11 percent from June 2019. Because the factory sector was in a recession prior to the pandemic, the level of output is still quite low, but the fact that production has jumped over 11 percent the last two months is a good sign.  

Durable goods rise

Orders for long-lasting U.S. factory goods rose in June as the economy continued its climb back from disruptions related to the coronavirus pandemic, though a summer surge in virus infections could damp future gains.

New orders for durable goods, products designed to last at least three years, increased a seasonally adjusted 7.3 percent in June from the previous month, the second consecutive monthly gain, according to the Commerce Department.

The auto sector was a big driver. New orders for motor vehicles and parts jumped 85.7 percent from the previous month.

Underlying figures were more modest. New orders for nondefense capital goods excluding aircraft, a closely watched proxy for business investment, rose 3.3 percent.

Even with two consecutive monthly gains, demand remains well below pre-pandemic levels. Overall, new orders last month were 15 percent lower than in February, and core capital orders were down 3 percent.

Tonnage jumps in June

After dropping 1 percent in May, the American Trucking Associations’ advanced seasonally adjusted For-Hire Truck Tonnage Index increased 8.7 percent in June, equaling 115.3 compared with 106.1 in May.

While the good anecdotal freight reports for July seem to be progressing in a positive manner, there is still concern that freight could slow as more states reinstate restrictions due to increasing Coronavirus cases.

Compared with June 2019, the index dropped 1.3 percent, the third straight year-over-year decline, but the smallest in the last three months. Year-to-date tonnage is down 2.4 percent compared with 2019’s numbers.

Spot Truckload Rates Defy Expectations

In the week ending July 26th, Load posts on the DAT One load board network are still elevated for this time of year, with freight networks disrupted by the ongoing coronavirus pandemic. That's pushed truckloads that would normally move as contract shipments over to the spot market, with spot rates climbing during a time of year when we'd normally see declines in prices.

National average rate per mile for dry vans:

June $1.81 per mile

July $2.03 per mile

Spot truckload freight rates remained elevated last week despite a slight decline in freight volumes and a modest bump in capacity compared to the previous week, said DAT Solutions, which operates DAT One, the industry’s largest electronic marketplace for truckload freight. Rates have moved higher week over week since the start of July, an unusual pattern as volumes tend to diminish and dry van capacity typically loosens from now through to early October.

Watch for imbalanced freight networks: Contract and spot prices have not moved in sync as they normally do. Spot rates have risen faster since May and are now close to contract rates for all three major equipment types. This is a direct result of the ongoing COVID-19 pandemic, which points to more inconsistent freight volumes and unbalanced carrier networks in the short-term as shippers send more loads to the spot market to meet erratic demand and carriers increasingly become more selective about the contract loads they haul.

Retail van freight volumes: Average spot van rates were higher on 65 of DAT’s top 100 lanes by volume compared to the previous week while the volume of loads increased on 90 lanes. Pricing edged higher in several key retail freight hubs compared to the previous week.

Rail freight moves downward

U.S. freight railroads reported 481,597 carloads and intermodal units during the week ending July 18, an 8.5 percent decrease compared with volumes during the same week in 2019, according to Association of American Railroads (AAR) data.

Carloads fell 15.7 percent to 214,685 units, while intermodal units dipped just 1.7 percent to 266,912 containers and trailers.

Only one of 10 carload commodity groups logged an increase: Miscellaneous loads rose 212 carloads to 10,782. Commodity group decreases included coal, down 22,464 carloads to 56,202; metallic ores and metals, down 6,659 carloads to 15,766; and nonmetallic minerals, down 6,108 carloads, to 30,986.

For the first 29 weeks of 2020 compared with the same period in 2019, U.S. railroads reported cumulative volume of 13,068,254 carloads, containers and trailers, down 12.8 percent.

At Wagner Logistics

During this period of summer many people are taking badly needed vacation time. At Wagner, we are busier than ever as our customers business surges and growth continues.

It’s during these periods when cross training is imperative to maintain performance. With people afraid to come to work coupled with people who need to decompress through vacation time, it is challenging. My hat is of to our managers and HR team who juggle this balancing act.

New projects continue to come our way and for that, I am very grateful.

What may Wagner Logistics do for you? We have an extensive history of 74 years of service to our customers and would love 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!