A forecasted lack of growth in truck freight, combined with an already lax truck utilization rate, will keep spot market and contract rates in a holding pattern this year, said analysts from FTR late last week.
FTR’s Avery Vise, vice president of trucking, said in a webinar held last Thursday that the firm predicts loadings in the van and flatbed segment to be flat, with no growth but no decline from 2019. Reefer loadings, meanwhile, are projected to grow at just 3% over 2019. All told, Vise predicts loadings to grow at 1% across the board. “1% growth is better than falling off a cliff, but from the perspective of carriers it means there’s not going to be any pressure on utilization or rates.”
For freight demand and rates growth, 2020 is poised to be “decidedly lackluster,” Vise said. He spoke alongside FTR CEO Eric Starks and FTR’s VP of Rail Todd Tranausky in FTR’s January State of Freight webinar.
Truck utilization trended below the 10-year average in 2019, and Vise expects that to continue in 2020. That comes after truck utilization was nearly maxed out in 2018.
But spot market rates have stabilized after sinking last year. FTR estimates that spot rates declined on average about 17% last year. “It was quite a hit for carriers that depend on the spot market,” Vise said.
That trend should be over, Vise said, with spot rates forecasted to climb by 1% in 2020.
“The sense of a lackluster but stable freight market coupled with a weak but stable utilization picture translates into freight rates that probably won’t move much,” he said.
Contract rates, on the flip side, are forecasted to slip a percent. Contract rates, unlike spot rates, were flat last year. “It’s probably not what carriers would wish for, but really that’s not too bad in the scheme of things,” Vise said.