BLOOMINGTON, Ind. – “Steady as she goes” was how Avery Vise, FTR’s vice-president of trucking characterized 2019 in a Year in Review State of Freight webinar Dec. 12.
A rise in carrier bankruptcies doesn’t reflect worsening freight volumes, but rather a rise in insurance costs and decrease in spot market prices. Contract rates have fallen only slightly this year, coming off sharp increases in 2017-2018. Contract rates have fallen about 1% this year, and Vise expects them to remain fairly steady going forward. Overall rates including the spot market were down about 6.5%.
“The general outlook we have, is for very gradual firming in the trucking industry,” Vise said of rates. “We don’t expect any big moves, certainly nothing remotely like what we saw in 2017-2018.”
Smaller carriers that are more dependent on the spot market may continue to struggle, Vise predicted.
Carrier profitability took a hit in 2019, as rising insurance and driver compensation costs could not be unwound as rates decreased. The metrics that affect trucking demand are mostly flat, and expected to stay that way well into 2020.
The bankruptcy of Celadon this week will have a temporary effect, if any, on capacity.
While the industrial sector has been weak, consumer sentiment and spending has remained strong. But changes in how consumers spend, namely the shift towards e-commerce, is changing shipping patterns. Retail jobs are disappearing while courier jobs are soaring.
“There is an ongoing change in distribution patterns and we have only just begun to understand what that’s going to mean,” said Vise.
Trade tensions are also having an effect on shipping patterns. Trade with Europe increased this year, while trade with Asia decreased. There’s less freight coming through the west coast ports as a result, which is having a negative effect on rail volumes.
But while 2019 may not have felt like a great year coming off a banner 2018, Vise said “2019 was still a pretty robust market in terms of volumes.”