The 3 and 12 month rate of change is clearly showing an upward slope not seen since January of 2013.
This positive trend is a reflection on the uptick in manufacturing and 3%+ GDP results in the second half of 2017. Please note that the advanced numbers released 12/19/17 shows a lower rate of change and a slight curve starting on the 12 month rate of change.
The LTL carriers are reporting tight capacity with an uptick in shipment count by 30%+. This means:
- Volume shipment pricing will be increasing significantly higher as the TL carriers hit capacity and the LTL carriers try to price themselves out of bigger volume shipments.
- With the increase in the number of shipments, shippers may experience an uptick in damages and billing errors.
The truckload industry is starting to experience tighter capacity as well. This has been showing in higher spot market rates over the last several months.
Bob Costello, ATA Chief Economist states:
- “The freight market is really strong. The solid truck tonnage figures over the last four months suggest to me that this holiday spending season might be better than many expected, and the best in several years. The strength in tonnage also shows that other parts of the economy are doing well, too, including business investment, factory output, and even construction."
- “Although cost pressures will be somewhat softer in this sector, purchased transportation will rise sharply, requiring rate increases to keep pace. With demand up from e-commerce and TL spill-over, carriers have price leverage that will result in the strongest price increases since at least 2014.”
- Projecting a softening in industry conditions after July 2018- given softer economics and an expected two-year lull in additional regulatory drags.
- Just when the market will be finally making its expansionary adjustment to this difficult tightness, conditions could call for contraction. (After July)
- The ELD mandate is now in effect.
- Expect contracted rates to rise because they typically lag spot rates by six months. Per the Cass Freight Index, shipments started increasing in November 2016 and expenditures in December 2016.
- We’re on a sharp and thin razor’s edge with TL and LTL capacity. Anything out of the ordinary can plunge us into an extremely tight market where spot rates will skyrocket:
- A severe weather disruption
- A bigger than expected uptick in manufacturing
- A major terrorist attack on US soil
- To do:
- Lock in one year contracted rates on every lane possible.
- Give as much advance notice when scheduling shipments. 2-3 days in advance is ideal.
- Be flexible on shipping and receiving your products. A day or two can make a big difference in rates.
Looking to increase productivity, control costs and have all the proper tools for management of your logistics needs at your fingertips?
Register now for a 30-minute demo!