Dive Brief:
- Spot rates could rebound 4% to 6% in the second half of 2020 while contract rates could climb 2%, DAT forecasted after a year of spot rates favoring shippers.
- While truckload volumes hit a five-year high in October and spot rates were up 7.3% year-over-year, high capacity levels kept spot rates low for the month, according to DAT.
- But there are still signs the freight sector is struggling as trucking companies close up shop and announce new layoffs. The Cass Freight Index was negative for the eleventh month in a row, which it continues to say is a signal of an economic contraction.
Dive Insight:
"The weakness in spot market pricing for many transportation services, especially trucking, along with recent airfreight and railroad volume trends, heightens our concerns about the economy," Cass wrote in its October report released this month.
Trucking companies have been keeping an eye on these indicators to get an idea of where the market might be headed, but getting it right is hard.
"I'm not an economist and I don't play one on TV, but we continue to look at those economic reports and have conversations with our customers to try to figure out what demand trends might be," Old Dominion Freight Line CEO Greg Gantt said on the company's earnings call last month when asked about 2020.
Political risk will likely still be a factor in the market, especially since it's an election year, Gantt said.
"It's really hard to predict where the demand is going to come from," Landstar CEO James Gattoni said last month.
If the automotive and manufacturing sectors pick up that could lead to more demand on the back end of 2020, Gattoni suggested. But low spot rates have pulled shippers away from contact carriers and into the spot market in the recent build-up to peak, according to DAT.
"Shippers were active in advance of the holidays," Peggy Dorf, a market analyst with DAT Solutions, said in a statement emailed to Supply Chain Dive. "And the low rates are effectively attracting more volume from contract carriers to spot transportation providers, especially during the busy season."
While volume may have rebounded in October, newly announced layoffs at engine manufacturer Cummins and continually low spot rates suggest those figures are more the compliments of peak season than a lasting trend.
