The trucking industry is facing a slowdown, with experts divided on whether a rebound is coming soon. Recent barometers show dismal readings, including a drop in the For-Hire-Trucking Volume Index and For-Hire Truck Tonnage Index.
The trucker market is also shrinking, with thousands of trucking operating authorities given up in just the first four months of the year. The truckload sector has experienced the worst hit, with truckloads down 6% year on year, and revenue per shipment down 5.7%. However, LTL loads have dropped 9.1%, but pricing has risen 2.7%.
Companies like Old Dominion have seen significant declines in revenue and shipment count, indicating the industry is struggling. Despite mixed opinions on the future, it’s clear that trucking contracts and pricing will require careful consideration in the coming months.
According to Old Dominion CEP, Greg Gantt, this is due to “continued softness in the domestic economy as well as a decrease in fuel surcharge revenue.”
“While our volume decreased on a year-over-year basis, our LTL shipments per day remained relatively consistent with the first quarter and our yield continued to improve,” he added.
In May, the logistics industry faced persistent challenges as seen in the Logistics Managers’ Index, which dropped for the third month in a row to 47.3, marking its first contraction in over six years. Both transport utilization and pricing also declined sharply, with a 9.5 point fall to 45.5 and an 8.9 point drop respectively – the largest contraction rate in its history.
The authors of the report believe that unless the peak season can provide a boost, the industry may not see much improvement in the near term.
“Without an influx of inventory for the holiday season, the freight market will continue to struggle,” they wrote. “Whether or not a new wave of inventory is coming is unclear.”
Despite current circumstances, ACT Research analysts foresee a positive future. While the light at the end of the tunnel may be faint, it’s surely there.
Trucking VP Avery Vise said, “The data that drives our forecasting model still suggests that market conditions for trucking companies are at or near bottom, but the recovery looks fairly shallow – certainly compared to recent markets.”
As the end of the month approaches, some are noticing a rise in shipping prices, leading to suggestions that locking in low rates for long-term contracts may be a smart move. However, it’s important to note that these rate improvements may be largely due to the start of produce season.
But there may be more trouble ahead. Experts at transport rate benchmarking firm Breakthrough predict that the trucking market will hit bottom in the third quarter. This is in part due to a slow housing market and high debt levels.
Additionally, the outlook for imports is not looking great. The U.S. National Retail Federation estimates that containerized imports were down 23% in May compared to the previous year. Projections for June, July, and August show continued declines. Although there may be a slight improvement in September and October, the federation still predicts an overall decline of 7.9% for Q3. It’s unlikely that this will be enough to turn things around for the trucking sector.
Source: The LoadStar
