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 Freightwaves, explores that question.
Data from March 2019 shows that overall trucking rates were down, primarily due to the largest decline in long-distance truckload 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 percent in March, after a 0.3 percent decline in February. As compared to last March, overall trucking rates have fallen to 5.7 percent, 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 trend in recent months coupled with the increase in oil and gasoline prices, many are wondering if this is a minor blip or a precursor for the rest of 2019. Shippers and carriers are anxiously waiting to see if trucking rates continue to fall throughout the spring, or if freight volume will rebound, along with freight rates.
You can read the full article here.