Trucking rates increase, but volumes decline (KR)
According to DAT, spot market rates for van and refrigerated freight rose to all-time highs in November, which operates the largest online marketplace for spot truckload freight. Flatbed rates were down slightly from the October two-year high. Despite the high rates, freight volumes were lower across all three trucking equipment types.
In November, contracted rates were only up 1.6%, but spot rates were up 23%, as seen in the chart below. Typically the industry has a 90 to 10 split for contract/spot, which is why most grocers and CPG companies have not reported much cost pressure so far. However, currently, the split is close to 80 to 20 during the pandemic. DAT Solutions reported that refrigerated freight's total volume is lower year over year, largely due to the depressed demand from the foodservice sector. Domestic loads of produce, which account for 53% of total production volume, are down 18% YOY. According to the USDA, there was a slight shortage of trucks, which has persisted due to a lack of drivers. According to the US Bureau of Labor Statistics, US for-hire trucking companies carried 55,800 fewer employees on their payrolls this November compared to a year ago. Last week Scheider National and Epes Transport both announced pay increases for drivers. Epes said it is the largest per-mile and hourly wage increase in its history. Driver turnover rose to 92%, according to the American Trucking Association in Q3. The surge in e-commerce has put pressure on trucking, and the high rates of returns after the holidays could keep demand higher in January.
Can beef retain new buyers, and what does that imply for Beyond Meat? (BYND)
Beyond Meat’s sales benefited from the pandemic in several ways. As consumers increased their home meal consumption, beef was the top sales driver for food retailers, as seen in the chart below.
Beef added more to sales than any other category in August and September. Beyond Meat gained space on the grocers’ bare meat shelves. Beyond Meat’s distribution points were up 68% YOY for the trailing four weeks ended Nov. 28. As meat inventory levels have returned closer to pre-pandemic levels, promotion levels have increased, but prices are still higher than pre-pandemic levels. The number of meat buyers and trips have decelerated from May as seen in the following chart. Beyond Meat’s, YOY sales growth has decelerated to +39% for the 4-week period ended Nov. 28 compared to +78% for the 4-week period ended July 11. Beyond Meat’s POS has slowed even more than the meat category.
U.K. grocery demand met with further restrictions, variant COVID strain, and Brexit
The restrictions in the U.K. have increased in most areas, and grocery sales have surged. According to Kantar, in the three months ended in November, grocery sales have increased by 11.3%. The risk of supply disruption at the end of the Brexit transition period on Dec. 31 has added to the grocery concerns and increased stockpiling. A more contagious strain of COVID-19 in the U.K. has caused several European countries to impose travel bans on the U.K. The new variant strain is said to be 70% more transmissible. The government has imposed a new tier-four level of restrictions on the affected areas, including London.
Total CPG demand has decelerated since the end of November, as seen in the following chart. The frozen category slowed to +9% in the most recent week from +16% two weeks prior. Nielsen forecasts U.K. shoppers will spend £2B more in Q4 than the €33B spent in supermarkets last year. Online grocery shopping reached a new peak of 13.7%. The UK is Nomad Food's largest country by sales, representing 31% of overall sales.
