Today’s Pickup: Carriers feeling good, but shippers see some softening

 ( Photo: Shutterstock )

(Photo: Shutterstock)

Good day,

Carriers continue to feel good about 2018, according to the latest Morgan Stanley survey, however, overall sentiment declined in the past two weeks and underperformed seasonality.

The firm said that the sequential change analysis measures the sequential growth rate of the index relative to historical trends. In the survey, which is conducted every two weeks, all current and forward demad, supply, and rate sentiment declined sequentially and underperformed seasonality.

Despite that, there was plenty of positivity in the report, with a plurality of respondents (41%) saying rates will rise over 4% year-over-year in 2018 with the average 7.6%.

Carriers and brokers continue to report truckload tightness, but some shippers say they are starting to see some softness in some markets.

Of those surveyed, 75% said current truckload demand remains strong and 64% expect it to remain strong in the next three months. TL supply is tight, said 74% of respondents, and 66% expect it to remain that way for the next three months. A full 83% say rates are higher compared to a year ago and 73% believe they will remain that way for the next three months.

“Confidence is high, until a hiccup in the economy. We'll see the impact of ELD's in real time after the holidays, or maybe not until April? The forecast looks to be clear sailing through June with continued tight capacity,” said one carrier.

Another said that it is seeing high single to double digit percentage rate increases in its national account bids while a third said it is the strongest/tightest market since 2005.

Shippers, on the other hand, see some differences. While prices are up, some believe there is plenty of capacity available and that rates shouldn’t continue rising.

“Pockets are starting to soften. I would expect the market to take a winter lull before ramping up to current levels in spring. The one thing that could throw off the market again would be another natural disaster,” said one.

Another believes brokers are trying to take advantage of the market. “Seeing capacity tightness only in certain markets. Brokers seem to be trying to milk more margin out of every load by taking advantage of an unstable market,” the shipper complained.

Brokers, on the other hand, are saying the same thing about carriers. “Carriers are taking advantage of current market forces and capturing higher rates than supply and demand justify,” the broker said.

The impact of ELDs are on the minds of everyone, and one broker’s comment summed up the current market. “The market is still tight, but we’ve definitely seen, regression to a more historic mean. However, we anticipate a great degree of uncertainty going into 2018 as ELD regulations are enforced,” it said.

Did you know?

The American Trucking Associations reported a 7.6% year-over-year increase in truck tonnage for November with its For-Hire Truck Tonnage Index climbing to 151.8 in November. It was 140 in November 2016. However, ATA also reported the not-seasonally adjusted index, which represents tonnage actually hauled by fleets, fell 3.1% in November to 147.1, compared to October.

Quotable:

“We have high expectations and are very optimistic that this will be a good product and it will have firm support from Tesla to make it work.”

- Scott Phillippi, UPS senior director for automotive maintenance and engineering for international operations, told Reuters, on the decision to order 125 Tesla Semis

In other news:

UPS places orders for 125 Tesla Semis

UPS has placed an order for 125 Tesla Semi electric trucks, the package delivery giant said on Tuesday.(Reuters)

Cargo lines to increase stops at East Coast ports

Shipping giants CMA CGM, Cosco Shipping, Evergreen and OOCL will increase container traffic to the U.S. East Coast starting in April. (Lloyd’s List)

Package locker use grows

With package thieves on the rise, more consumers are turning to “package lockers” as the final delivery stop for their online orders. (CNBC)

Truck Tonnage Index continues rising

Truck tonnage rose 7.6% in November following a 10.5% increase in October, according to the American Trucking Associations. (Transport Topics)

Oil prices moderating

Oil prices have remained steady near $57 a barrel as indications that U.S. supply is diminishing and global markets are balancing with demand. (Bloomberg)

Final Thoughts

While the ATA For-Hire Tonnage Index increased in November 7.6% over November 2016, the not-seasonally adjusted index, which measures the tonnage actually hauled, dropped month-over-month 3.1%. Combined with some mixed views of early 2018 from a Morgan Stanley survey, we could be seeing a slowing of freight volumes as the new year begins.

Hammer down everyone!

Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.

Comment

Brian Straight

Brian Straight has covered the U.S. trucking and transportation community for more than 10 years, winning numerous regional and national editorial awards, including a Jesse. H. Neal Award. Prior to working on FreightWaves, Brian spent 10 years at industry trade magazine Fleet Owner, and prior to that managed daily newspaper editorial operations.