Strong Demand & Tight Capacity Drive Freight Market in 2018
As fall approaches, the U.S. freight market, including the demand for trucking, remains strong in the second half of 2018.
Freight hauled by trucks is projected to grow 3.4% this year, according to the American Trucking Association. The ATA’s U.S. Freight Transportation Forecast predicts that freight moved by all modes will increase from 15.18 billion tons in 2017 to 20.73 billion by 2028.
A growing economy means robust demand for freight, with carriers able to charge more for their services. Challenges include a continued shortage of drivers and trucks, along with high fuel prices.
Here are some of the broader trends that will continue to affect freight carriers and drivers in the near term:
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- E-commerce. Online shopping hit new highs in 2017, and shows no signs of slowing down in 2018 and beyond. The more orders placed by consumers, the more drivers and trucks will be needed to fulfill them.
- Rising rates. Fuel costs, ELD compliance and other factors have caused spot rates for trucking services to rise by 28% in 2018, according to Bloomberg. Some shippers have responded by turning to intermodal or rail transport options.
- Tight capacity. A combination of more cargo to move, fewer available drivers and a short supply of trucks, also puts upward pressure on shipping costs and makes it harder to fill orders in a timely fashion.
- Time is money. The ELD mandate makes time an even more precious commodity. Every minute you spend waiting at the loading dock is money down the drain. Carriers and owner operators are becoming more selective in choosing which shippers to serve, and avoiding those with a reputation for excessive wait times.
- Emerging platforms. Carriers must continue to emphasize superior service and convenience, as on-demand freight apps like Uber Freight appear in the marketplace. Convoy and Amazon also offer services that can help with finding loads, but may also challenge traditional notions of customer loyalty to a single carrier. Autonomous and electric vehicles, such as a recent introduction by Tesla, also bear watching over the coming years.