Logistics Management | Keep looking up to follow path of truckload rates

09.29.17 | Jeff Berman

Having a myopic approach, or outlook, to something that “may” happen can often prove to be misguided, but that mindset seems to be spot on when assessing the direction of truckload rates and tightening truckload capacity.

Why? Based on commentary from speakers at recent industry gatherings like the 2017 FTR Transportation Conference and CSCMP Edge, it stands to reason that in the coming months, rates are only heading in one direction: up.

The reasons are plentiful to be sure, when one considers that spot market rates continue to see steady gains, and van load volumes on the top 100 hit a record high for the week ending September 23, according to recent data from DAT Solutions.

To be sure, truckload supply and demand continue to feel the pain in the aftermath of Hurricanes Harvey and Irma in the form of tightening capacity, driven in large part by capacity flowing to Texas and Florida with emergency supplies on board and recovery efforts underway, with capacity going towards recovery efforts leaving other parts of the U.S. underserved in terms of capacity, wrote Stifel analyst John Larkin in a research note following the FTR conference.

And he added that contract prices that were on average 3% before Harvey and Irma may have doubled in recent weeks to 6% or more in recent weeks, coupled with shippers that put the most pressure on carriers for rate reductions in 2015 and 2016 are likely to see things turn around the other way as they relate to carrier rate increases, due to the shift in the supply and demand balance.

At the FTR conference, Larkin said that the impact of post-Hurricane recovery efforts could on the truckload market could be akin to what happened in 2014, resultant of the harsh winter weather in 2014 that had a harsh impact on capacity availability and rates for shippers.

That is something that has received a fair amount of attention in recent weeks.  Themes of the tight truckload market, the ongoing driver shortage’s impact on available capacity, coming regulations (think ELD) are all top of mind for shippers, and it is not hard to see why that is, and is likely to remain, the case for the foreseeable future.

Sentiment akin to that was echoed by Noel Perry, an economist at FTR and, when he said that 2018 is likely to be a “nasty year” at the FTR conference.

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