If you were to browse the industry news headlines, you would see a clear indication of a hot freight market, with record outbound tender volumes & tightened TL capacity level not see in some time. The “Covid economy” has been a roller coaster ride, with the beginning of the shutdown being a rut for trucking, causing drivers to leave the industry and carriers to shut down due to low rates, inflation, rising insurance, and increased regulation. Combine that with the fact that the average driver age of 55 is causing some drivers to choose to retire early due the COVID risk, while others who have caught COVID have temporarily lost their CDL due to the DOT Drug and Alcohol Clearinghouse.
Demand for carriers have increased for many reasons, including, but not limited to, the replenishment of low retail inventory and safety stocks that were allowed to fall during the pandemic. This has led to >30% spike in spot truckload rates compared to April.
But how long will this last? Will rates continue to rise?
Consumer spending is the key and must be closely watched. Will consumer spending shrink due to the loss of the $600 UI bonus for millions of Americans? What about for the families that were counting another stimulus check? Thus far, the stalemate in Washington hasn’t affected the trucking market, but there is no doubt that the stimulus assisted the recovery of the freight market since April.
On the flip side, will drivers return to the market due to the high rates and add back the much-needed capacity? The FMCSA is moving forward with an unpopular pilot program which allows 18-20 year old drivers behind the wheel to help to attract drivers to the market. However, additional regulations including a proposal for mandatory hair testing could make it more difficult to recruit drivers into the market.
Only time well tell, as no one can predict what 2020 has left to show us.
Trucking companies, shippers, brokers, and 3PL’s should take this opportunity to adapt logistics technologies such as DigCargo to satisfy customer requirements, grow partner relationships, increase operational efficiency, and be a consistent, sustained reliable partner no matter how the state of the freight market.