Are We Expecting a Truck Freight Boom for 2017?
Posted by World Trade Distribution
Filed Under: Container Freight
2017 is looking to be a fruitful year for the trucking industry, in particular because of a vastly increased demand which results in higher rates.
Typically, shipments slow down between Christmas and New Year’s Day, mostly because the holiday shopping mania has come to a halt, while, statistically, many people go on vacation. But in late 2016, the demand for trucks and vans along key routes had more than 5 loads per truck. All across the country, cities are seeing an increase in truck loads. A couple of examples:
- Memphis had 3,000 loads on one day alone with 10 loads per truck.
- Atlanta had 4,500 per day with about 3.9 loads per truck.
The rates for outbound reefer loads, which transport perishable goods, exponentially increased the last week of December in Florida, Southern Texas, and Chicago. With the exception of California and Nevada, there was a huge spike in demand for reefer freight nationwide, and there were not enough trucks available to make all of these deliveries. The demand for refrigerated trucks led to rates of $1.95 and $1.96 per mile in November and December, almost on par with the peak rate of $1.98 per mile in June while contract rates for reefers also reached June rates in December at an average of $2.12 per mile. Flatbed rates for December 2016 were up $0.06 per mile compared to December 2015.
The 18-month freight recession ended in May of 2016 after the industry experienced price drops from the collapse in oil prices in 2014. However, 2017 is heralding a truck freight boom because e-commerce brought on a massive increase in demand both during and after the holiday season. An increase in on-demand freight services has also contributed to a greater need for trucks and vans, including refrigerated vehicles at all times of the year. While oil prices and the state of renewable energy may be unpredictable for 2017, e-commerce alone followed by on-demand and spot market freight services has caused a massive truck freight boom to eclipse the recession.
With the expectation of increased corporate investments and private and public infrastructure spending surges in 2017, it is looking to be an optimistic year for the trucking industry. Rates may also increase if regulations on truckload capacity are lifted as a result of the ELD (electronic logging device) mandate, which smaller fleets are not expected to adapt to until late 2017. Since small fleets capture a majority of the spot freight market, being ahead of the ELD mandate is something to be aware of in order to not miss out on the boom rates that can be enjoyed this year. The combination of political, economic, and regulatory changes is leading to drastic changes in 2017 that are calling for increased demand for truck drivers and all types of freight deliveries.
Don’t forget to contact World Trade Distribution, Inc. for all of your freight transport needs.