Trucking Rates Are Falling, but for How Long?

 In Industry News

In a reversal of the trend of the past few years, trucking rates are now falling, and industry experts are wondering where the market will bottom out. Ibrahiim Bayaan, chief economist at Freightwaves, explores that question in the article “Race to the Bottom as Long-Distance Trucking Rates Continue to Fall.”

The largest decline in long-distance truckload rates in more than four years occurred last month (March 2019). This brought down overall trucking rates, and it seems this trend is likely to continue in the immediate future, due at least in part to broader economic factors.

According to the Bureau of Labor Statistics, the producer price index (PPI) has softened over the past few months, which has served to decrease inflation pressure in the economy. The trucking industry PPI has mirrored this change. Producer prices for general freight declined 0.3% in February and 1.1% in March. In year-over-year change from last March, overall growth in trucking rates has fallen to 5.7%. This is primarily due to the lower long-distance full-truck rates, although LTL rates have also fallen.

Significantly, even though the driver shortage is still acute and unlikely to change anytime soon, it seems 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 having to lower rates because of the reduced demand for trucks.

The trend in recent months coupled with the increase in oil and gasoline prices mean that March’s decline was not a complete surprise, but the longer term implications are still unclear. 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.

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