ACT Research Indicates Freight Industry Recession

Recent data from ACT Research indicates a freight recession.  According to ACT President Kenny Vieth, the metrics that ACT tracks show two back-to-back quarters of negative growth, meeting the technical definition of a recession.

Some of the metrics indicative of the freight recession are higher inventories on lots and consistent declines in spot rates.  Additionally, the Cass Freight Index saw 6 months of consistent declines at the beginning of 2019.

Spot market loads are down 50% year-over-year in June.  However, the spot market is still up over rates from two years ago.  LTL and rail freight are also down over several consecutive months of declines in volume.  Additionally, 55 of the top 72 DAT reefer lanes saw a decrease in spot market rates over the past 2 weeks.  The rate decreases are a result of agricultural volume leaving a hole in capacity as main produce seasons in Texas, Arizona, California, Florida and the Carolinas are nearing their ends.

Furthermore, falling spot market rates are creating a shipper’s market.  Shippers are moving to the spot market for lower rates than their agreed upon contracted rates.  Capacity surplus and low freight volumes are driving market rates down.  ACT Research predicts that truckload and intermodal contract rates will continue to fall for the remainder of 2019.

Freight Market Conditions and Forecast

The volume push from late 2018 tariff talks with China drove rail and port volume up temporarily, but numerous variables including the record-breaking flooding in the Midwest drove down freight volumes as a whole.  New truck orders surged mid 2018 ahead of a promising freight market for later on that year.  The lack of volume in the market and declining market rates in early 2019 are leaving trucks sitting empty.  Progressing trade talks between the U.S. and China will continue to affect market conditions.

However, lower numbers of new truck orders and increasing adaptation to new market conditions by the trucking industry indicates an eventual recovery in spot market rates.  According to ACT Research, the freight market will bottom out in the foreseeable future and start to bounce back.

Furthermore, the recent restarting of trade talks between the U.S. and China is promising for businesses, even though uncertainty remains.

Get a freight quote here.

Phone: (859) 308-5100

Email: Sales@BM2Freight.com