Year-over-year contract rates are projected to increase and overall rates are expected to remain mostly flat this year.
Overall trucking rates are forecast to remain mostly flat in 2019 despite an expected decrease in spot rates, Avery Vise, vice president of trucking for FTR Transportation Intelligence, said.
Year-over-year spot rates, excluding the service fuel charge, are expected to drop by as much as 10 percent through August before recovering late in the year, according to FTR. The weekly broker-posted rate per mile — also excluding the service fuel charge — has hovered around $1.75 for much of early 2019, which is slightly more than the five-year average but about 20 cents to 25 cents lower than the numbers from early 2018.
“The spot market is still tighter than the five-year average, but it is far looser … than it was last year,” Vise said Thursday during an FTR state of freight webinar titled “The Outlook for Trucking.” “Similarly, spot rates are now very close to the five-year average and well below 2018 levels.”
The decrease in spot rates is due, in part, to the rebalancing of contract rates following spot rates’ historic highs of mid-2018, Vise said. Contract rates are expected to be between 5 percent and 10 percent higher year-over-year in early 2019 before decreasing and flattening throughout the year.
“I think besides the freight moving more to contracts the other big thing we’re seeing is we’ve digested the [electronic logging device] disruption to a large degree, so that has made things a lot smoother,” he said. “Those are probably two of the biggest factors.”
Overall, total rates are forecast to dip less than 5 percent year-over-year by midyear before returning to almost no change by the end of the year.
But the forecast could change.
Driver availability is one of the biggest question marks about how rates will play out in 2019, Vise said. Payroll employment for for-hire trucking jobs, which also include non-driver jobs, are forecast to improve between 4 percent and 6 percent in 2019. Strong U.S. job creation and low unemployment could make maintaining the current year-over-year growth rate challenging, he said.
“There’s clearly a risk that we’ll hit a point that we cannot continue adding drivers anymore,” Vise said. “That would lead almost certainly to a higher utilization figure and a change to our rate forecast upwards.”
For now, though, the seasonally adjusted monthly active truck utilization figure is expected to fall to about 94 percent, which is its lowest number since 2016 and a decrease from the nearly 100 percent experienced from late 2017 to 2018.
The FTR truck loading index also is projected to grow between 2 percent and 4 percent year-over-year in 2019. In 2018, eight months experienced year-over-year increases between 4 percent and 6 percent.
“As you can see, mild, nominal growth throughout the year, but year-over-year growth will not be as strong as 2018 or even 2017,” Vise said. “The loadings index and spot market data paints the picture we expect to see painted in 2019: a good, strong year, but just not a crazy one like we’ve seen in the past 18 months or so.”
FTR forecasts trucking spot rates to fall in 2019
