REPORT: “Freight Recession” Has Officially Arrived, “Significant Overcapacity” to Blame
Columbus, Indiana – A freight recession has officially arrived according to a new report by trucking industry analyst ACT Research.
In its July installment of the ACT Freight Forecast, ACT Research maintained its view that truckload and intermodal contract rates will fall this year due to overcapacity and weak freight demand.
Tim Denoyer, ACT Research’s Vice President and Senior Analyst, said, the latest data paints a picture of “bad news” in the short-term, but “good news” in the longer term.
“The bad news is we’re in a freight recession and the factors we focus on tell us spot rates are headed still lower near-term, but that’s been going on for a while,” Denoyer said.
“The good news is that for the first time this cycle, we see evidence on the horizon for an eventual bottoming and upturn in spot truckload rates, thanks to low new truck orders and improving capital discipline from the trucking industry,” he analyzed.
A big part of the problem, Denoyer said, is “significant overcapacity” in the truckload market.
ACT’s “Truckload Rate Gauge” measures industry supply and demand. It’s July gauge is below.
Denoyer said the “Current” gauge provides a good directional feel for spot today and contract in about six months.
He explained that the “Six Months Out” gauge predicts the spot market picture in six months and contract in about a year.
Denoyer said ACT analysts expect the supply side to begin to improve later in this year as the decline in U.S. Class 8 tractor build rates continue.
Until then, Denoyer said shippers will continue to have the upper hand in rate negotiations.
Read the latest news on the Class 8 truck market HERE.