FREIGHT VOLUMES REMAIN STRONG

The freight market had another record week of volume to truck ratio increases. The continuous expansion of freight volumes has multiple reasons and in the long term we are still looking to the industry to resolve and overcome many market challenges, such as high unemployment, stimulus packages, health and safety issues for employers, and still many businesses have not re-opened.

As we move further into Q3, the Q2 GDP data showed the US economy shrank by an annualized 32.9 percent in the second quarter of 2020 compared to forecasts of 34.1 percent plunge.  It was the biggest contraction ever, pushing the economy into a recession as the corona virus pandemic forced many businesses including restaurants, cafes, stores and factories to close and people to stay at home, hurting consumer and business spending.

Decreases were seen in personal consumption, exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending while federal government spending jumped.

However against all this, the freight market continued to be resilient against all odds, and very disconnected from all macro data that has been released about the US economy.

The industrial side is also starting to come back which will most probably mean the freight market will have an extended growth in freight volumes to truck ratio, while services such as airlines, hotels, restaurants etc. will most likely continue to be depressed for a longer period of time, which we predict means the general population will continue to shift their spend more onto physical products with less services being available.

This will most probably continue to impact the freight market, with the Oil & Gas sector reporting they are returning to higher output.

With this said we continue to watch the freight markets closely, the OTR market has continued to increase incrementally over time, and we feel has shown the truck load capacity is at its limit for this year and we predict will continue in this way.

As more drivers stay home, unemployment stimulus packages and benefits that have caused many drivers to stay off the road, and not having returned to work yet.

This has now put us in a volatile Q3 and will most probably continue into Q4 and at this moment we do not see a calm market returning at any point this year.

As previously we saw after June the normal seasonality market conditions have not been the same and we have also seen maritime activity still  continuing to be strong for US imports.

We see capacity continue to be tight, as we have previously mentioned, not only due to many trucking company bankruptcies but with the closing of a lot of truck driving schools we also face a major shortage of new drivers entering the market.

The recovery will depend on the capacity of the country to control the pandemic and avoid more waves of infections. Still, the number of new cases continues to increase, making several states to scale back or pause the reopening of their economies. Fed officials see the US economy shrinking further in 2020.

The industry will have to focus on fleet growth, people returning to the market and generating capacity and we do not see this happening easily in the short period.

The seating truck count has shown many trucking companies are starting to bring parts of their capacity back to the market, however we see many challenges for the 3PL spot market to manage through during this period with significant increases in months specifically for contracts rates as 3PL’s will find it more challenging to balance their traditional margins through seasonal periods as this in all shows that we are heading into a very tight market to the end of Q4 and maybe even into Q1 and Q2 of next year which will continue to have a ripple effect into the market and the supply chain.

Weather Alert

Florida port remains shut down as Tropical Storm Isaias approaches. Isaias is forecast to make landfall possibly as a hurricane in the Carolinas tonight, causing dangerous storm surge and flash flooding for the Eastern Seaboard. Tropical Storm Isaias will continue to move northward through the far western Atlantic today and could regain hurricane strength before making landfall in the Carolinas tonight.

Source: Weather Prediction Center

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AMI

Ameri Management, Inc. (AMi) provides American businesses with high-quality, reliable, and affordable Freight Broker related services. Regardless of the type of business you run or the kind of products that need to be shipped, AMi has the right carriers for you. Our Freight Broker related services specialize in moving Full Truck Load (FTL), Less Than Truck Load (LTL), and Intermodal freight across all states in North America. Our years in the industry has helped us gain the experience, tools, and the dedicated carrier relationships needed to offer first-class Freight Broker related services.

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