We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • ::COVID-19 COVERAGE::
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Change Me
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Change Me
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
Home » Five factors that could raise freight costs in 2020
newsworthy

Five factors that could raise freight costs in 2020

Morgan Stanley conference
February 25, 2020
DC Velocity Staff
No Comments

While the macroeconomic picture for 2020 looks good, rising freight rates could produce some potential headwinds going forward, according to Morgan Stanley analysts Simeon Gutman and Ravi Shanker. Gutman and Shanker provided this forecast on Tuesday during the Retail Industry Leaders Association (RILA) LINK2020 supply chain conference.

Consumer spending, while expected to be lower than 2019, will still be strong, driven by low interest rates and healthy employment rates, said Gutman. At the same time, many industrial data points are also looking good.

However, these positive signs could be tempered by five factors that might affect truck rates in 2020, according to Shanker:

1. The final electronic logging device rule, which took effect in December 2019, could negatively affect capacity, which would, in turn, drive up rates.

2. Insurance rate increases could also reduce capacity by 3-5%.

3. The new Drug and Alcohol Clearinghouse, an online database that provides real-time information about drivers' drug and alcohol program violations, has the potential to reduce driver supply by 1-3% in the first year and up to 10% in the long term.

4. The International Maritime Organization's 2020 regulation requiring shipping companies to restrict their sulfur emissions could potentially increase diesel by 5-33%.

5. California's AB 5 rule, which imposes a stricter definition for what constitutes an "independent contractor," could make it harder to operate effectively in the state as a truck owner-operator. This could impact capacity in California, a key region for freight transportation.

"As we go through peak season, we expect to see a squeeze in freight rates," Shanker predicted.

The good news, according to Gutman, is that retailers will be more prepared for such a disruption, as the freight market turbulence of 2018 is still fresh in executives' minds.

"The bad news is that it's going to be hard to avoid this," he said. "This is not a one-time event. Demographics around trucker shortages and the increase in regulations means this is going to be the new normal going forward."

Transportation Trucking Regulation/Government
KEYWORDS Morgan Stanley & Co.
  • Related Articles

    ATA continues fight against RhodeWorks

    Air cargo sector could see rise in volume in 2020, but freight revenue continues to drop.

    Failure to prescreen air freight could mean added costs, delays

Recent Articles by DC Velocity Staff

Report: Global TMS revenues to nearly double by 2025

E-commerce fulfillment squeezes retailers’ profit margins, Manhattan Associates says

Logistics-as-a-Service platform expands with $2.5 million funding round

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • IBM survey says digitalization trends will sweep trucking industry by 2030

  • Gartner survey signals increased investment in resilience over the next two years

  • What Level of Automation is Right for Your Warehouse?

  • Growing up … and up and up: interview with Sam Bertram

  • Old Dominion adds nine freight service centers to handle business growth

Now Playing on DCV-TV

D92f0dd1 a98c 434a 9e17 30b63ee72c90

Automated Pack-out and Print-Apply System for thredUP

DCV-TV 4: Viewer Contributed
SilMan Industries designed and implemented a mixed polybag-carton system, including automated print and apply, in a new regional Fulfillment Center for thredUP, one of the world’s largest online resale platforms for women’s and kids’ apparel, shoes, and accessories.The Situation Secondhand clothing and online...

FEATURED WHITE PAPERS

  • Using innovation to manage peak seasonal demand

  • Time to rethink your lift truck power

  • Warehouse Management System Project Toolkit

  • Solving Talent Management Challenges Now and In the Future

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2021. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing