REPORT: Trucking Analysts Forecast Volume and Rate Declines, Restocking to Slow Soon
Bloomington, IN – Trucking freight and business analyst FTR Transportation Intelligence is warning the negative impacts of the COVID-19 pandemic will outweigh the positive short-term spike in demand and rates of certain commodities.
Last week, FTR released a report predicting a recession is likely on the way in 2020 largely due to the coronavirus outbreak and the widespread mitigation policies put in place in a growing number of states across the country.
“FTR expects 2020 volume and rate declines across most segments,” the firm stated.
In a series of newly released reports, FTR is now forecasting the U.S. Gross Domestic Product (GDP) to show an 11% drop during the second quarter.
FTR also expects “sharp drops” in GDP within the auto and industrial freight sectors.
“Nearly every carload sector will feel dramatic repercussions from the coronavirus,” FTR cautioned. “Industrial-focus trucking segments are already starting to see the effects of constrained commerce.”
Further, FTR predicted, “the positive effects of restocking grocery stores and distribution centers on dry van and reefer markets are likely to slow substantially in the next two to three weeks.”
Making matters worse, FTR says the negative impacts felt on the economy will likely send consumer confidence tumbling.
Almost certain to take a major hit is the commercial equipment industry, FTR says.
“Demand for new trucks and trailers is expected to be extremely low during the crisis period,” an FTR report stated. “There is tremendous economic uncertainty and fear, the intensity of which has not been present since the Great Recession. There is extreme economic risk to buying new equipment at this time. Fleets that were planning to purchase new equipment likely will wait out the crisis before placing orders.”
What Impact Will $2 Trillion Stimulus Package Have?
The U.S. Senate passed the largest emergency relief legislation in the nation’s history on Wednesday.
The $2.2 trillion stimulus package is aimed at boosting the economy and saving businesses large and small as well as jobs for millions of Americans.
Key elements of the proposal include $250 billion in direct payments to individuals and families, $350 billion in low-interest small business loans, $250 billion in unemployment insurance benefits and $500 billion in loans for distressed companies.
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It now moves to the U.S. House of Representatives where it is expected to pass on Friday.
The question is, will it ease the economic damage done by the coronavirus outbreak?
FTR analysts are not convinced it will, at least in the short-term.
“While this will certainly be a huge help to stabilize the financial situation for American families and businesses, FTR does not believe it will fundamentally change our forecasts for Q2,” the firm said. “The scope of the package could position the economy for a stronger rebound beginning in Q3, but we will have to analyze the specifics of the final legislation to understand whether it will stimulate additional economic activity or just offset much of the financial damage caused by the pandemic and the response to it.”
In a webinar for FTR customers on Thursday, Eric Starks, CEO, said it is likely to be late in the year before the U.S. economy begins to bounce back.
“We don’t anticipate seeing any noticeable rebound until Q4,” he stated. “A lot of that though is a return of inventory accumulation. What we don’t know as of yet is how much inventory gets runoff and then when do we start to restock.”