Imbalance causes spot truck rate rise: DAT Freight & Analytics
US SHIPPERS were urged to expect higher spot rates as freight demand remains high into 2021 by experts addressing the JOC Inland Distribution Webcast, who said 'imbalance' itself was cause of fuel price hikes
US SHIPPERS were urged to expect higher spot rates as freight demand remains high into 2021 by experts addressing the JOC Inland Distribution Webcast, who said 'imbalance' itself was cause of fuel price hikes.
'There were winners and losers, and that means there was an imbalance,' said Chris Caplice, chief scientist at DAT Freight & Analytics and a senior research scientist at the Massachusetts Institute of Technology; he was speaking during a panel discussion on the North American Freight Outlook.
'Even in retail,' which has driven the recovery, 'I can see winners and losers,' he said.
Among the losers, at least initially, were industrial manufacturers who have lagged the retail sector recovery. 'Industrials plummeted into the summer, but it's picked up since then,' Mr Caplice said. The IHS Markit US manufacturing purchasing managers index (PMI) rose to 53.4 in October, which was the fourth consecutive month of expansion for the industrial benchmark.
But food services, theatres, and brick-and-mortar retailers have not been able to adapt to e-commerce, he said, adding that anyone remotely connected with e-commerce and both durable and non-durable retail goods is a clear winner.
'Pent-up demand has come back quickly, and that's lifted freight markets,' said Paul Bingham, director of transportation consulting at IHS Markit.
'This is the story about why freight is strong, even though we have an economy that has pockets of tremendous weakness in it. Goods orders and shipments now exceed the pre-pandemic trend.'
Small businesses of all types are also among the 'losers' of this recession, Mr Bingham said. 'There was a tremendous drop in small business activity in March, a 50 per cent drop, and they're still suffering enormously even through September, with activity down 25 per cent year over year,' he said. 'Some of these small businesses have closed permanently.'
One reason truckload contract rates have not risen as quickly or as high as might have been expected is that contract volumes had not risen above year-ago levels until October, Mr Caplice said. For the first nine months of 2020, the American Trucking Associations For-Hire Truck Tonnage Index, which mostly represents contract freight, was down 3.3 per cent year on year.