Signs of cooling for truck rates (UTZ)
Freight demand in 2021 was 1% below 2018 levels and even with 2019 according to Michigan State University’s For-Hire Truck Transportation index. The volume of loads on DAT’s freight network representing ~$120B in annual freight spending was relatively flat in 2021. How can shippers square that with the tightest trucking capacity market in years? There was a shift between loads moved under contract rates and the spot market. In 2021 loads moved under contract rates fell 12.4% while loads moved on the spot market increased 12.7%.
There are signs the freight market is cooling so far in March. The volume of loads on DAT’s freight network has fallen 1% week over week and load posts on DAT’s load board has fallen 10% month over month. DAT’s load postings compared to trucks for hire have fallen for several weeks as seen in the following chart.
Dry van load post volumes have fallen for the past three weeks and are now 30% lower YOY while truck postings have been relatively flat. This has led to a gradual decline in spot rates which have fallen for the past six weeks as seen in the following chart.
Higher truck freight costs have been one of the larger headwinds for many CPG companies. Supply chain disruptions led to greater use of the spot market. Improved inventory positions will lead to better utilization of freight capacity.
Utah reduces hard seltzer selection in grocery stores (BUD)
Utah’s legislature has passed an omnibus alcohol bill that is waiting for the Governor’s signature. The bill would ban the sale of beverages containing ethyl alcohol in grocery stores. About half the hard seltzers available in Utah will be removed from grocery and convenience store shelves. Ethyl alcohol is a commonly used stabilizer for artificial flavorings. The new law would take effect on July 1. Hard seltzers containing ethyl alcohol could still be sold in state liquor stores. Several flavors of Bud Light Seltzer, Truly, and Vizzy will have to be removed. It’s a reminder that states have various beverage alcohol laws. There does not appear to be any movement in other states to make a similar change as Utah. The most anticipated moves at the state level for alcohol are to lower the tax rate for spirits-based beverages to the level of beer and to allow on-premise establishments to sell alcohol to go.
Canadian beer sales accelerate (TAP)
Total beer volumes in Canada increased 4.5% YOY in December, accelerating from 2.6% in November. Domestic beer volumes grew 3.7%, accelerating from 3.0% in November as seen in the following chart. Imported beer volumes accelerated to 9.6% in December from a 0.3% YOY decline in November. Exported beer volumes fell 11.2% in December, the fourth consecutive decline. 85% of the beer consumed in Canada is made in Canada. Canada’s restrictions for the on-premise industry have been much more onerous for the industry than the U.S., so a recovery boost should be stronger in 2022.
