Something we’ve seen over the years is that extended periods of high freight rates tend to lead to higher numbers of new truck orders. We saw it in 2018, and new equipment orders again hit record levels in 2020. This time, the industry is faced with a lot more uncertainty.
For most Americans, Chinese New Year is rarely noticed unless, of course, you’re in the freight business, where it’s the equivalent of the U.S. Christmas holiday shipping season.
We expect 2021 to be very different to 2020. The pandemic resulted in a crash in demand, followed by a capacity crunch, which will make year-over-year comparisons difficult. We don’t have any non-pandemic years in recent enough history to make meaningful comparisons.
.One of the themes of the pandemic-driven freight market has been tight capacity, which has driven up spot rates to record levels and put upward pressure on contract rates at the same time.
In this volatile 2020 freight market we’ve watched wild fluctuations in freight volumes and rates, with most traditional and reputable market indicators reflecting what we see—a bifurcated freight market.
At this stage in the holiday shipping season, demand for logistics services is continuing to grow in both retail and manufacturing sectors, but according to the recent results from the Logistics Managers Index (LMI), “firms cannot add logistics infrastructure quickly enough to keep up with burgeoning demand.”
Truckload capacity is already tight, but with such a short 35-day shipping season, peak Christmas tree harvest volumes will strain a freight network already at its limits.
Last week we reported on several reliable and unbiased industry volume indices (ATA Truckload Tonnage, Cass Freight Index and MSU Surface Transportation Index), which all indicated overall truckload freight volumes are still down year-over-year. This week we take a look at two more freight volume indices.
This week, we are taking a look at the leading freight demand indicators for the truckload sector with much the same to report as last month - freight volumes are down overall, but it is a very different story at the commodity level.
As retailers get ready for the holiday shopping season, a lot of the required inventory has already been hauled by carriers and positioned in warehouses across the country, following the peak in imports we had back in August. But obviously, retailers are approaching the holiday season differently this year.
