It will be a forgettable year for freight demand, though a bottoming process is likely to begin in the second half of 2020 that, if various factors break right, could presage brighter days for 2021, a transportation analyst said Monday.
Benjamin J. Hartford, analyst for investment firm Baird, said freight volumes will suffer during the year’s first half and, at best, stabilize during the second. A “less-bad” scenario may be the most realistic outlook for the July-to-December period, Hartford told the SMC3 annual winter meeting in Atlanta.
The healing process will be gradual and painful, Hartford said. U.S. industrial activity, after what may have been a head fake-like firming in December, appears to be softening again, he said. None of the usual “channel checks” — analyst lingo for discussions with supplier, shipper and carrier executives–are leading Hartford to believe an upturn is imminent, he said.
“Stabilization is the name of the game” in 2020, he said, adding that “we will test the trough in growth” over the next few weeks.
At the same time, Hartford said he expects inventory de-stocking to moderate in the first half of the year, which may put a floor under the decline and lay the groundwork for a potential upturn. U.S. businesses advanced their orders in late 2018 to get goods into the country before threatened U.S. tariffs on Chinese imported goods were to take effect on Jan. 1, 2019. Many businesses spent 2019 working off bloated inventories rather than placing new orders.
Hartford cautioned that risks accompany his projections of a second-half bottom materializing. An inverted yield curve, in which short-term interest rates are priced higher than long-term rates, may rear its head again after appearing briefly in 2019 before the Federal Reserve cut interest rates to drive down short-term yields. A yield-curve inversion indicates that bond market participants, who effectively control intermediate to long-term interest rates, sense a recession-like downturn in the offing. Hartford noted that every yield-curve inversion in the U.S. since 1960 has been followed by a recession. This year’s presidential election may inject the same type of business uncertainty as the 2016 election did.
The coronavirus, which began in Wuhan, China, but has spread to the U.S. and other countries, is another issue for economies and markets to grapple with. The massive U.S. truckload market remains well-supplied, and truckload management’s public hand-wringing over a shortage of qualified truck drivers has waned. This will dampen demand for intermodal services because railroads and intermodal marketing companies have to compete with lower over-the-road rates. Less-than-truckload (LTL) carriers, meanwhile, will see less “overflow” business from truckload because capacity won’t be tight, Hartford said.
David Spencer
The analyst seems to completely ignore trends related to capacity. I would question any forecast that places a greater emphasis on demand than capacity when trying to predict future conditions. They also fail to provide any indication of how far demand will fall below 2019 levels. It just seems like a half written article that points to some weak evidence that there will be less freight and therefore a softer market. Conceptually, there are some decent ideas here, but overall missed the mark. Publishing opinion content without the facts that the opinion is based upon is dangerous, and could lead to many businesses taking the wrong strategic approach to conditions this year. I am commenting because in my opinion this article should not have been published as it is currently written, and was a waste of time to read.
CM Evans
I concur, it seems only days ago that there was an article written of how great 2020 would be. Not great in terms of a boom, rather stability throughout the year and it too was based on 3rd party analysis.
How bout you cats write your opinion article based on your own opinions from your own analysis. You’re in the data business and seem to do fairly well w/it regarding the freight markets.
Level Up Freight Waves and put your name on it.
David Spencer
Wow I could not have been more wrong in terms of a demand driven slowdown. It was not for the reasons exactly laid out in this article as it did appear certain markets such as industrials were returning, but it was still correct in what was possible.
I apologize to the author and realize my comment was entirely uncalled for.
Noble1= Shamash (Shemesh/Utu) the Babylonian God of the Sun(god of justice, morality, and truth-(enforcer of divine justice )
The nurse in Wuhan asks to share the video of her testimony , therefore the least I can do is grant her wish with you .
Quote:
“China: Coronavirus whistleblower nurse claims 90,000 sick”
She gives some pretty alarming details in regards to how quickly it’s spreading and mutation .
You choose who to believe . Her , or some communist government covering up and censoring the truth .
I choose to believe her .
In my humble opinion ……….
Noble1= Shamash (Shemesh/Utu) the Babylonian God of the Sun(god of justice, morality, and truth-(enforcer of divine justice )
Quote from article :
“The coronavirus, which began in Wuhan, China, but has spread to the U.S. and other countries, is another issue for economies and markets to grapple with”
The deeper we dig , the more we find out that they are LYING ! . So far it appears that the outbreak began around October 2019 . However, it’s been spreading out of control and they had to say something . If it were not the case , we still wouldn’t know about it .
If you search you’ll find videos about what is going on in the Wuhan hospitals along with what nurses are saying . It’s a heck of a lot worse than what is being reported .
They are so overwhelmed with deaths and over crowding in the hospitals that they are working on building another within 6 days . That in of itself should make us realize that it’s quite an epidemic . In 6 days , at this pace it may be used as a mass grave rather than a hospital .
They have been covering up the truth and severity of this epidemic .
Let’s keep in mind , and I Quote:
“In 2008 too, the Chinese government allowed a cover-up that led to 300,000 babies being poisoned by contaminated milk formula in order to avoid embarrassment on the sidelines of the Beijing Olympics.”
Are we naïve enough to believe that they have changed their ways since ? This is outrageous ! Snake soup ??? LOL ! Come on people , they are laughing in our faces and insulting our intelligence ! Don’t trust them !
In my humble opinion ………….
Noble1= Shamash (Shemesh/Utu) the Babylonian God of the Sun(god of justice, morality, and truth-(enforcer of divine justice )
Quote :
“China’s government has tight control on the country’s media and Internet and often censors any form of criticism.
several official social media posts with updates about the outbreak have been quickly deleted.
citizens have found clever ways to dodge those censors by comparing the coronavirus outbreak to the Chernobyl explosion or by replacing Xi’s name in tweets with ‘Trump.’