Baby it’s cold outside, but it’s hot for trucking

( Photo: Shutterstock )

The worst kept secret in the industry is that demand is in excess of capacity in every mode of truckload trucking, and has been for several months.  We experienced the first ‘fall surge’ in demand in a decade, which only served to make the situation even more severe.  Shippers are crying and truckers are taking it to the bank.  We can’t tell you how many times in the last couple of months we’ve heard, “If you can’t make money in trucking now, then you never will!” 

What changed?  Where did all the volume come from?

We feel it is important to remind everyone that this is before the Dec. 18 enactment of the ELD rule and the late December passage of the Trump Tax Cut.  Both of which should serve to cut capacity and further boost volume. 

So as you head into the heaviest part of the contract rate bidding/renegotiation season, what should shippers, brokers, and truckers be focused on?  For starters, we should remind readers of a fundamental rule of all marketplaces: Volume Leads. We have repeatedly observed in a host of different markets that volume goes up before pricing starts to improve and volume goes down before pricing starts to weaken. Even in markets as basic as the weather, the number of hours of sunshine (sunrise to sunset) starts to decline long before the temperature starts to fall, and the number of hours of sunshine starts to increase long before the temperature starts to rise. 

Volume is strong and poised to continue getting stronger.  Seasonality will bear out in February, but by March, we expect demand to continue to outstrip capacity, and expect the fall of 2018 capacity crunch to be even worse than the capacity crunch of 2017. 

We understand, this period in history will pass, if you survive it.  At some point in the future, demand will wane, and capacity will grow enough to meet and then exceed demand.  Trucking is considered a cyclical industry, because it is.  However, we see that as being several quarters, perhaps even several years, away.  For now, the only thing that is cold is the weather, because everything else is trucking is hot and poised to stay that way.  Everyone in the industry, no matter what your role, should be planning for a long hot summer.

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