REPORT: Truckload Rates To Go Lower, Risk Of Freight Recession Growing

Little Rock, Arkansas – Freight analysts at ACT Research are warning truckload rates are headed south.

In a new monthly report focusing on the future of the US trucking industry, titled ACT Freight Forecast, U.S. Rate and Volume OUTLOOK, Tim Denoyer, ACT Research’s Vice President and Senior Analyst, said truckload rates are expected to continue softening.

“Truckload spot rates are set to soften further due to tractor capacity additions, pulling the contract rate market down by mid-year. LTL rates will be most resilient and continue to rise due to the unique dynamics in that market, but TL and intermodal rates are heading lower,” Denoyer commented.

 

The report covers the truckload, intermodal, LTL and last mile sectors.

 

 

According to data analyzed by ACT, dry van rates, net fuel, fell 15% y/y in Q1 and are likely to drop 20% y/y in the coming months.

Additionally, the report says freight growth has slowed materially, and it’s not just timing effects from shippers positioning around tariff threats.

 

Further, ACT points out that headwinds to for-hire freight volumes in 2019 include tariffs, tighter financial conditions, the industrial slowdown, housing and auto softness, and fast private fleet growth.

Denoyer said that while a “freight recession in 2019” is a serious possibility, data suggests U.S. consumers will keep the economy growing, but “very slowly.”

 

 

“Critically, this slowdown in freight is happening just as truckload capacity is accelerating,” Denoyer commented. “After growing less than freight for most of last year, truckload capacity has accelerated to 7% y/y growth in early 2019. We think this is the key story behind lower spot rates and why the pricing pendulum is starting to swing to the shipper.”

 

Kenny Vieth, ACT’s President and Senior Analyst, added that he expects trucker profitability to continue to feel the squeeze. “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 increasingly pressure contract rates and by extension, trucker profitability in 2019,” he said.

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