Supply-Demand Balance Increases as Freight Rates Decline

According to ACT Research’s recent release of the For-Hire Trucking Index, the supply-demand balance increased as volumes ticked up and freight rates continue to decline.

“The volume environment remains soft as the holiday shopping crescendo continues, but goods demand is soft and retail inventories are overstocked,” Tim Denoyer, vice president and senior analyst at ACT Research, said. “The seeds of the next tighter environment are being sown as rising costs and falling spot rates threaten the viability of the significant small fleet capacity which has recently entered the industry. And for the mostly larger fleets in our survey, capacity growth has slowed for three straight months. By our estimates, spot rates are further below costs than ever before, which could shorten the bottoming process. We also polled our fleet friends on contract terms and found some shippers pressing for more shorter-term contracts.

“The reading reflects a loose trucking market and a late stage in the freight cycle. We believe the bottoming process has begun, and it’s possible that supply factors – including tight diesel inventories – could shorten the downturn.”

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