The economic downturn wrought by the global spread of COVID-19 potentially hit its lowest point and freight demand has entered recovery which is forecast to continue on through the end of next year, according to CCJ magazine and freight analysts.
Freight volumes seemingly have “found the floor,” said Chris Pickett, chief strategy officer at Coyote Logistics during a webinar reported on by CCJ.
“We think it’s an inflationary run from here,” potentially lasting for the next 18 months, Pickett continued, barring another virus outbreak that spurs another economic slowdown.
After the “historically awful second quarter” ends, FTR economist Bill Witte, who spoke in an FTR State of Freight webinar, said he expects the economy should expand next quarter and continue to grow. He predicts a 22% drawback in GDP in the second quarter, followed by a 16.2% jump in the third quarter. He predicts growth in the 5% range for every quarter next year. Witte noted his forecast trends optimistic.
He also said much of economists’ work amid the COVID-19 crisis is “guesswork,” with several wildcards that could alter forecasts: Policies and relief packages from Washington, a flare-up in virus cases and the looming presidential election.
Pickett predicts that rates will continue to firm up in the coming weeks and months, too, as freight demand grows and capacity exits the industry. Unlike in the 2008 crash, when fuel prices soared and supply shrank as carriers folded, trucking supply this year remained intact.
With both consumer consumption and industrial production picking up, and with capacity likely to contract in the coming months, per-mile rates should “ride the wave of a post-recession recovery into another year of an inflationary spot market starting as early as the first quarter of 2021,” Pickett said.