COLUMBUS, Ind. — Slowing US Class 8 tractor fleet growth, while roughly a year later than price signals suggested, will help move the cycle forward, and how quickly it affects rates will depend mainly on freight demand and fleet productivity, according to the latest release of the Freight Forecast: U.S. Rate and Volume OUTLOOK report from ACT Research.
“Goldilocks economic conditions of strong growth and disinflation are largely holding, and a rising tide should eventually lift all boats, but at the moment, the freight growth being generated by the economy is being handled by private fleets and railroads,” said Tim Denoyer, ACT Research’s vice president and senior analyst. “Private fleets have added more than the industry’s net capacity growth in the past year as the for-hire sector has contracted. The productivity of this new capacity is now being tested. Most private fleet operations are one-way, and though some are adept at filling backhauls in the for-hire market, most are not.”
Denoyer also noted that to the extent that private fleets are successful filling backhauls, it is further delaying the for-hire rate recovery, and this is likely a factor in lingering spot market softness.
“Backhauls are not mission critical for private fleets, and as a result, the lower productivity of this equipment as seasonal volumes pick up should support higher spot volumes,” he shared.
Denoyer said that spot rates moved up a bit more than normal during Roadcheck this year, but except for two days last week, spot rates remain below year-ago levels.
“The load/truck ratio is now up year-over-year, and the trend of the past six months has improved as capacity has contracted,” Denoyer said. “And even as private fleet capacity has come in more recently, spot volumes are starting to pick up. While we don’t see a tight market, these tighter dynamics suggest further increases in spot rates.”
Born in Pine Bluff, Arkansas, and raised in East Texas, John Worthen returned to his home state to attend college in 1998 and decided to make his life in The Natural State. Worthen is a 20-year veteran of the journalism industry and has covered just about every topic there is. He has a passion for writing and telling stories. He has worked as a beat reporter and bureau chief for a statewide newspaper and as managing editor of a regional newspaper in Arkansas. Additionally, Worthen has been a prolific freelance journalist for two decades, and has been published in several travel magazines and on travel websites.
