Trucking, Rail Outlook Poor in 2016, Analysts Say

01.14.16 | Erica E. Phillips, The Wall Street Journal

Low diesel fuel prices and increased availability of trucks in the spot market will keep transportation costs down for retailers and manufacturers, while causing pain for the freight and logistics industry, according to industry analysts.

Growth in freight volumes slowed in the final months of 2015 after a strong start to the year. Shippers are having an easier time finding trucks to hire as a result. That’s giving them power to demand cheaper rates, reversing the dynamic seen for much of 2014 and early 2015, when trucking companies could charge higher prices because they knew shippers had few alternatives.

That dynamic is likely to continue this year, with freight rates held back by widespread availability for trucks. With the price of fuel down 25%, providers of truckload and less-than-truckload services have been forced to slash prices. A similar dynamic is at work in the rail market, where plunging coal and oil volumes have freed up cars and driven down rates.

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