Truckload Rates May Not Trend Down for Long

Rates are drifting down, which is typical for this time of year. July is a time of transition. After Independence Day, the berries, watermelons and patriotic merchandise have been delivered and consumed, the growing season comes to an end in Florida, South Texas and Southern California, and marketplace pressure recedes. Indeed, rates have been declining gradually for vans and reefers since July 5th, and flatbed rates finally began to slip last week.

This pattern is likely to continue for a few more weeks, and then I’m betting we will see a second peak in late August through much of September. Of course, freight availability and rates could plateau instead, but a number of recent news items fuel my sense of optimism.

The evidence? Economic conditions are improving, as indicated by an estimated 4% GDP growth in the second quarter. Imports are up, generating additional freight. Job growth has been fairly steady for the past six months, and there has been a strong upward trend in manufacturing. As a result, rail carloads and for-hire truck tonnage both rose in June.

Those indicators, among others, support an improvement in consumer confidence, which is at its highest level since October 2007, according to the Conference Board. That is just the kind of news that encourages retailers to expand inventories, anticipating a busy Christmas season. We will start to see the impact on truckload volume within a few weeks.

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