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Trucking Conditions Solid Despite Facing Headwinds

This year will be somewhat of a transition year for carriers as freight flows appear to be less disrupted than in 2014,” says John Larkin, managing director and head of transportation research for Wall Street investment firm Stifel Nicolaus & Co.

In a recent industry communique, as reported by Fleet Owner magazine, Larkin predicted that freight levels will stay elevated in the near term despite uneven economic data and job growth in the U.S. and a falloff in manufacturing activity.

Larkin said that more “near-shoring” and in-sourcing of manufacturing activity in North America, coupled with e-commerce growth, will help freight volumes grow faster than the rate of U.S. gross domestic product (GDP) growth this year.

“At the margin, those phenomena will generate incrementally more ground parcel, last mile delivery, LTL, and outsourced contract logistics opportunities for carriers and logistics companies serving these service segments,” he wrote.

For those reasons, Larkin still expects 2015 to be a good year for trucking overall, with 2016 marginally better. He added, however,  that it could be “difficult” for some carriers to replicate the contract price increases they received in 2014.

Furthermore, trucking should still be poised to benefit as regulatory initiatives planned by the FMCSA over the next two years – namely ELDs and mandatory speed limiters – will further tighten already scarce capacity, added Larkin.

“This should create the beginnings of the ‘mother of all truckload capacity shortages’ by the second half of 2017.”

As a result, Larkin predicts truckload freight will “spill over” into the LTL sector in a more pronounced way, with intermodal volumes continuing to grow as truck lines and railroads forge “deeper and more collaborative” relationships.

Full story here.

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