U.S. freight market to stay in positive territory through 2020
Brokers to see drop from historic business climate of 2018, but market strong enough to handle challenges in regulations, weather and politics, DAT says.
By Ben Ames
The U.S. freight market in 2020 will likely have moderately positive economic conditions, following "a great year for 3PLs and freight brokers, and a very tough year for shippers" in 2018, load board operator DAT Solutions said Thursday.
Demand for freight transportation will probably not stay as high as the historically tight freight capacity and high shipping rates of 2018, since many fleets have already responded to that shortage by investing in additional trucks and by raising salaries for drivers, Senior Market Analyst DAT Peggy Dorf said in a session at third-party logistics provider (3PL) trade group the Transportation Intermediaries Association (TIA)'s annual show in Orlando, Fla.
In addition, the freight market faces a "regulatory shadow looming" with the pending phase-out of AOBRDs , the automatic on-board recording devices that were granted a grandfathered exception to the federal mandate for electronic logging devices (ELDs) that began in late 2017. That exception ends in December, when all the fleets still using legacy AOBRDs will be required to switch over to the new technology.
The forecast is even further complicated by wild-card variables such as the rise in extreme weather events—such as floods throughout the Midwest and hurricanes Michael and Florence—and wide swings in politics and policies that could affect both demand and supply as the country heads for a Presidential election year, Dorf said. And finally, many economists have warned that the U.S. and global economies could see a moderate recession between now and 2021.
Despite all those threats, the U.S. freight market is likely to dodge the potholes and cruise to continued success through 2020, she said. The industry will be buoyed by healthy economic conditions, both on the consumer level—as measured by employment, wages, taxes, and purchasing—and on the industrial level, as measured by sectors such as manufacturing, oil and gas, and housing, said Dorf.
Statistics point to less volatility in spot market rates in 2019 than in 2018, in part because freight contracts will be reliably filled by carriers making up for lost time and finally emptying warehouses that are stuffed with cargo that was rushed into the U.S. in December and January ahead of President Trump's threatened tariff war with China.
March Recap: Unexpected events, including flooding in the Midwest and a major tank fire in Houston, prevented the typical surge of shipments ahead of the close of Q1, https://t.co/P5wNjXkuYE pic.twitter.com/1xGqcqBqJi— DAT Solutions ???????? (@LoadBoards) April 12, 2019
That same pattern mirrored DAT's report on Thursday that truckload freight volumes had increased in March, although ample capacity and weather-related supply chain disruptions kept rates in check.
The DAT Freight Index increased 4.3 percent in March compared to February, representing a monthly volume indicator for full-truckload van, refrigerated ("reefer"), and flatbed freight transportation. "We anticipated a bigger increase in demand for trucking services, but unexpected events, including flooding in the Midwest and a major tank fire in Houston, prevented the typical surge of shipments ahead of the close of Q1," DAT Senior Industry Analyst Mark Montague said in the release. "As a result, truckload rates were lower than expected in March."
About the Author
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
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