As COVID-19 sent a wave of shock through consumer habits in the early weeks of the pandemic, the effects also rippled through the U.S. trucking industry. But according to an inaugural “Freight Insights Report” for 2020 from Seattle-based Convoy, the data tells a story of continuity as much as it does disruption.
Convoy, a digital freight startup, analyzed millions of pickups and deliveries and more than 1,000 unique data points collected on each shipment over the course of the year. The company found that COVID-19 sparked a consumer frenzy in March which set off a wave of panic buying. This was followed by demand “falling off a cliff” in April and May as states locked down.
CEO Dan Lewis told GeekWire last April that the U.S. supply chain responded extraordinarily well to the pressure — “largely due to the heroic actions of individual truck drivers and workers at factories and warehouses.”
Into summer, demand rebounded and capacity tightened, according to Convoy’s report, and the year closed with carrier supply and truckload demand dynamics consistent with a freight cycle forecast.
While the pandemic has been both a health and an economic disaster, it created a disconnect between the goods and services sectors in the U.S. Spending on food is one clear example, as spending at restaurants and bars declined and grocery spending shot up.
The goods economy rose sharply from March onward, with people taking fewer vacations and eating out less, household income was shifted to things instead of experiences. Convoy said this trend toward spending less on services and more on goods has been a boon for the transportation and logistics industry.
Discretionary spending on things such as hobbies and home improvements ground to a halt in March and April, then jumped above pre-pandemic levels as people received relief checks and reduced spending in other areas, according to the report.
As people turned to remote methods of shopping, e-commerce rose quickly and dramatically. The roughly 30% rise from a year earlier represents a decade’s worth of consumer behavior shifts in a single year, Convoy said. And this change in consumer spending had effects on the freight industry that could be measured by analyzing data such as facility ratings, dwell times, on-time pickup and delivery, and incidental costs.
Overall, as people stayed home and ordered more things online, retail warehouses and distribution facilities had more shipments to fulfill. This led to more trucks picking up and dropping off, which caused longer wait times.
Dwell times lengthened as overall truckload volume rose, Convoy said, reaching their longest averages in November, the month with the highest shipment volumes.
Those challenges affected how carriers rated facilities, as the average rating fell to 4.33 out of 5, slightly below 2019’s average of 4.38. Convoy said ratings were highest for the year in January 2019, and fell as shipment volumes rose after the start of the pandemic.
Convoy is a rare unicorn in Seattle, one of a handful of privately-held companies valued at more than $1 billion. It is No. 11 on the GeekWire 200, our ranking of top Pacific Northwest startups.
The company, which uses a digital platform to facilitate transactions between trucking companies and shippers, raised $400 million at a $2.7 billion valuation in September 2019. Convoy has 1,000 employees in Seattle and Atlanta and, with more than 90 open positions, plans to grow by 20% in 2021.