That word is on everyone’s mind as trucking and transportation begin rolling out of quarantine along with the rest of the country. As we’ve all seen, COVID-19 has had a profound impact on our industry. Shippers are closed, volume is changing and rates have, at times, dropped to unsustainable levels for carriers.
But it looks like we may be starting to turn a corner, coming up from mid-April’s industry bottom.
Freight volumes are slowly rising, and it looks like we could be headed for a climb similar to a certain shoe company’s logo – a “swoosh” showing a decline, then a grind up over time to normal volumes. A recent report from the Bureau of Labor Statistics should give shippers some insight into what may be coming when volume is back to normal. The BLS has stated that employment in the trucking/transportation sector is now at 2014 levels. That's something that bears watching and preparing for.
Transportation supply is currently not what it was in 2019, nor 2018. When things do come back online and volume takes off, the marketplace could be primed for another situation like 2018 where demand outpaces supply and drives rates up quickly. As it was in 2018, supply will likely be very reluctant to add capacity as quickly as a hedge against volume volatility. Class 8 truck orders were actually negative for April, and it’s estimated that 2020’s truck orders will be over 200,000 less than 2019’s. When the market gets tight, it’s likely going to stay that way for a while.
Shippers will need to access spot market carrier capacity to move their freight. Usually, this means calling a broker who will make a bet on that rate to the shipper. Brokers do this because they need to price high enough to be ahead of the rising carrier market rate while also pressuring carriers to keep pricing low so they can maintain (or increase) their average margins (16%).
We happen to know a better way for shippers to gain direct access to carriers without booking through a broker while also developing relationships directly with the people moving their freight. Loadshop™ is an easy to use platform that gives shippers real-time feedback from carriers about what it takes to move their freight, without someone else’s large commission hindering fair pricing. As we see it, that’s real transparency and the future of transportation.