This year looks to be the strongest for North American truckload and less-than-truckload pricing since 2005 and 2010, reports the Journal of Commerce.
“We could break records this year” in an economic cycle “unlike any other,” said Benjamin Hartford, senior research analyst at investment firm Robert W. Baird & Co., at the SMC3 2018 JumpStart Conference in Atlanta.
Hartford and consulting economist Donald Ratajczak said shippers moving goods in North America should see goods or raw materials will see higher demand, but ongoing capacity constraints mean they should be bracing for rate increases not seen in eight years.
This year looks to be the strongest year for truckload and less-than-truckload (LTL) pricing since 2005 and 2010, “when we had 4 to 5 percent core pricing growth” excluding fuel costs, Hartford said.
The analyst predicts an increase of 5 percent plus – “and there could be upside on that,” he said. “We’re hearing anecdotal reports of contract renewals at 10 percent. If volume growth does accelerate, we could get into a situation in the spring where if there are capacity issues and intermodal service problems…”
“That sets the stage for carriers to march into [contract] negotiations and say, ‘What more evidence do you need? We need price.’ This year could be similar to prior peaks in rate growth.” Even if rates peak in terms of rate of actual increase in 2018, they could continue to rise into 2019 and even 2020, he said, barring a recession that he does not immediately foresee.
Underlying issues he mentioned are the electronic logging device (ELD) mandate for truck drivers, depleted inventories and rising industrial production, and higher fuel prices.
But Ratajczak says the economy is the biggest factor. US GDP grew 3.1 percent in the fourth quarter.
Read full JOC article here.