REPORT: Rates To Continue Sliding, Profitability Will Suffer

Little Rock – Market conditions are expected to keep downward pressure on freight rates, and thus diminish overall profitability for truckers in 2019, according to a new report from freight analyst ACT Research.

ACT’s latest release of the North American Commercial Vehicle OUTLOOK projects that slower freight growth, an easing of driver supply constraints, the resumption of the long-run freight productivity trend, and strong Class 8 tractor fleet growth will continue to create less than desirable conditions for truckers to thrive this year.

“With the industry awash in capacity, trucker profitability is expected to roll-over in earnest by the second half of 2019, as 2018 contracts expire and are replaced by lower 2019 rates,” said Kenny Vieth, ACT’s President and Senior Analyst.

 

However, there was some good news in ACT’s analysis.

Vieth indicated that while “GDP is expected to slow,” ACT analysts’ concern about the possibility of slipping into a freight recession in 2019 have “largely moderated.”

He elaborated, “Near-term indicators are no longer signaling imminent danger.”

Vieth did express growing concern over the “ratcheting-up” of the ongoing trade standoff between the U.S. and China.

As trade talks came to a halt last week, the U.S. increased tariffs to 25% on $250 worth of Chinese imports.

On Monday, the Chinese Finance Ministry announced it would raise tariffs on $60 billion worth of U.S. imports beginning June 1, 2019.

Beijing will increase tariffs on more than 5,000 products to as high as 25%. Duties on some other goods will increase to 20%.

Vieth called the escalation in trade tensions, “not conducive to near-term growth or confidence.”

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