With trucking rates continuing to decline, industry experts are wondering where the market will bottom out.
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Will trucking rates continue to fall?
With trucking rates continuing to decline industry experts are wondering where the market will bottom out? In the article “Race to the bottom as long distance trucking rates continue to fall” Ibrahiim Bayaan, Chief Economist at Freight Waves, explores that question.
Data from March of 2019 show that overall trucking rates were down primarily due to the largest decline in long distance truck load rates in more than four years. This is significant news considering it’s a change in such a long running trend.
The Bureau of Labor Statistics determined that the Producer Price Index (PPI) has softened over the past few months, which has served to diminish inflation pressure in the economy. The trucking industry PPI has followed suit. Producer prices for general freight decreased 1.1% in March, after a .3% decline in February.
As compared to last month, overall trucking rates have fallen to 5.7%, primarily due to the lower long distance full truck rates—although LTL rates have also fallen. As of now it appears that the high rates of mid-2018 and capacity crunch might not be the case for 2019. Carriers who added capacity to meet last year’s demand are now finding that the slower demand for trucks is driving rates down.
While March’s decline was not a complete surprise given the trends in recent months, coupled with the increase in oil and gasoline prices, many are wondering if this is a minor blip or precursor for the rest of 2019. Shippers and carriers are anxiously awaiting to see if trucking rates continue to fall throughout the spring or if freight volume will rebound along with freight rates.
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