Optimism Grows for Significant Freight Rate Increases

 

Fleet Owner --- Trucking industry reports indicate capacity continues to tighten, and significant freight rate increases are expected in the coming months.

Recent hurricanes, the pending electronic logging device (ELD) mandate, and an uptick in overall freight demand has unquestionably given trucking fleets the upper hand in 2018 negotiations, according to a report from Cowen and Co. The report said private fleets and third-party logistics firms are as bullish as we’ve ever heard with rate increases possibly reaching 15 percent.

John Larkin of Stifel noted that in recent weeks truckload volumes and spot rates have remained strong, and “contract rates began to move in the positive direction for the first time in a year and a half."

The report from Cowen called the spot market as hot as any time in the past three years, and for truckload carriers, the higher pricing translates into stronger rates on contract freight.

On the less-than-truckload side, volumes have been up significantly with some truckload overflow freight, industrial sector strength, and continued growth in the e-commerce sector.

In another report, IHS Markit said while spot rates have stabilized since the hurricanes, they remain elevated.

One result of the rate increases, Larkin said, could be increases in driver pay between 5 percent and 7.5 percent.

Growing market optimism was also evident in FTR’s preliminary September report on trailer orders, which came in at 21,500 units, up 47 percent from August and 84 percent from a year earlier.