Shippers’ Revenge? New Report Sounds Alarm For Trucking Companies
Little Rock, Arkansas – Shippers are beginning to once again gain leverage in freight rate negotiations as conditions for trucking companies continue to worsen.
For the first time in more than two years, freight analyst FTR report conditions for shippers have moved into positive territory with a rating of .01 in their Shippers Condition Index (SCI). In its new report reflecting November ’18 conditions, FTR attributes “softening in rates and lowering fuel prices” for the change in the SCI.
FTR expects the SCI to stay within a range close to neutral throughout 2019. However, analysts warn the measure could move into even more positive territory for shippers if freight demand weakens further, alongside strong truck buying and improved driver hiring which would push freight rates lower.
Todd Tranausky, vice president of rail and intermodal at FTR, commented, “Conditions have improved noticeably for shippers in the last few months. The prospect of sustained lower fuel prices, increasing capacity in the truck and rail sectors, and the first signs of a turn in rail service raise the prospect of a much better 2019 than shippers expected during much of 2018.”
A trend of surging capacity is causing rates to fall according to the most recent DAT Trendlines reports. The report ending the week of January 19, stated, “Truckload capacity has returned to the market in force, and national average rates for dry van, reefers and flatbeds continue to decline in a typical seasonal slump.”
In it’s Trendlines report ending the week of January 12, DAT said, “The surge in capacity and less urgency on the part of shippers knocked down national average rates for dry van, refrigerated and flatbed freight.”
Spot load prices have fallen below contract rates after double-digit increases in 2018, according to a report by Trucks.com. When you add it all up, economic pessimism is beginning to creep into the psyche of investors and a growing number of trucking industry stakeholders.
Transportation Nation Network will to continue to bring you the latest trucking business news and analysis.