Survey Says Expect Freight Volumes to Increase
More than half of respondents to a Journal of Commerce survey said they expect overall freight volumes to increase through the end of the second quarter of 2017.
About a quarter of respondents said they expect shipments to decline.
“We see some possibility we could see a bigger lift in the second quarter rather than waiting until the end of the year,” said Gregory W. Ritter, chief customer officer for XPO Logistics. “We hit bottom and now we’re bouncing back up.”
The nation’s gross domestic product is up, with November 2016 rising above 3%.
Excess truckload capacity, plenty of inventory and lower fuel costs led to a shippers market last year, and they used it to drive down truckload pricing. By mid-2016, third-party logistics operators felt the heat from lower per-mile rates. By third-quarter 2016, carriers felt pressured by the demand for rate cuts. Large truckload carriers began eliminating excess capacity by cutting trucks from their fleet.
However, after hitting bottom in April, the spot market began to rise. By the end of November, spot market freight volume was up 66% on average. Spot market truck pricing gains eventually show up in contract rates.
Unless the economic upswing proves short-lived, carriers will probably have more say in pricing talks than they’ve had in the past two years