January 18, 2019 / By Erika / Cargo • Logistic • Shipping • Transport • Trucking / 0 Comments
Capacity, economic growth, and what the experts say…
2018’s strong growth in the beginning of the year trailed off a bit as the year went on. The fourth quarter experienced a bit more of a boost than the normal holiday demand due to concerns of the upcoming tariffs and shippers trying to get ahead of this additional expense. The Chinese tariff was supposed to go into effect January 1, 2019 but has been delayed for 90 days to allow for more negotiations. Even with this end of the year slight surge, 2018’s freight demand ended lower than at the beginning of the year.
As Noël Perry, principle of Transport Futures and chief economist for Truckstop.com, said in his Transport Navigator analysis, “2018 started at a VERY high level but gradually and steadily declined as the year matured. Declined may be too strong a word because the market is still relatively tight.”
For carriers, 2019 may seem slower when comparing it to the frenzy we experienced in the beginning of 2018. For shippers, they can look for potential easing capacity issues, but there are still more loads than trucks in most lanes according to DAT. We are not out of the capacity woods yet.
American Trucking Associations’ Chief Economist Bob Costello also expects continued, but slower, growth in demand for freight hauling in 2018. He said, “We have hit the peak in the current freight cycle,” Costello said.
“The economy is still growing, just not as fast as it has been in 2018.”
Positive Indicators to Watch:
• Unemployment levels remain low and personal income is rising which could lead to increased spending.
• There is wide support for FMCSA’s proposed Hours of Service (HOS) changes which could alleviate some of the drive shortage by attracting more drivers to our industry.
Negative Indicators to Watch:
• Many economists warn of continued market and economic volatility in the first half of 2019. This can cause a depressed freight demand.
• Even though we listed the HOS changes as a positive, we expect a continued driver shortage while we wait for improved regulations to reinvigorate the appeal of the profession.
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Noël Perry, has been provoking the transportation market for more than forty years. You can subscribe to the Transport Navigator at www.transportfutures.net
SOURCES
https://www.dat.com/blog/post/rates-rise-but-gains-may-be-temporary
https://www.ttnews.com/articles/infrastructure-trade-loom-large-trucking-new-year
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