The transportation and logistics industry had a rough time in 2019, but the industry can rest easy knowing that the future looks bright. Less-than-truckload (LTL) carriers will be especially happy to know that the market unrest that marked last year likely won’t be carried into 2020.
Excess supply and softening demand resulted in headaches for LTL carriers in 2019, but the market has since stabilized. Overall, it’s being predicted that there will be a significantly less volatile market throughout 2020. 2019 was marked by a continuous downward trend in rates, sinking below 6% in June. Rates spiked for a short time in December before dropping again at the end of the year.
“The winter peak was higher than the summer peak. This is a sign that we’re cyclically moving higher heading into 2020,” said FreightWaves’ Director of Freight Intelligence, Zach Strickland.
In other good news, the U.S. manufacturing sector is showing some signs of recovery. This could mean a stronger than expected spring freight shipping season. The U.S. manufacturing industry has been in a months-long slump, which has impacted the trucking industry, LTL carriers in particular.
Despite the growing importance of e-commerce, the transportation industry is still heavily dependent on industrial freight. Many of the issues that plagued the industry in 2019 such as excess truck capacity, a shortfall in LTL volumes, and depressed truckload rates can in part be blamed on the declining manufacturing and industrial output. With manufacturing now on a slight uptick, LTL carriers could expect a modest increase in spot truck rates.
The year is still early, and although LTL carriers can expect a smooth 2020, they should remain prepared for anything. The industry could be rocked by economic and political factors this year. The U.S. will face a presidential election, the U.S and China are still locked in a trade war, and the deadly Wuhan coronavirus threatens to halt international transportation.
As the saying goes, expect the best and prepare for the worst. LTL Carriers can expect a thriving 2020 and should continue to invest in automation and technological advancements.
