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Today’s Pickup: New survey highlights optimism among shippers

Shippers in a Morgan Stanley survey are optimistic over the macro environment and expect rate improvement moving forward. (Photo: Morgan Stanley)

Good day,

Shippers are showing renewed optimism in the macro environment with rates improving across railroads and truckload, according to the results of the Freight Pulse 56 Shipper Survey from Morgan Stanley.

The survey was conducted in the fourth quarter of 2019. It found that shippers’ economic outlook is up from mid-cycle levels. Capacity is expected to tighten across all modes as shippers continue to reduce inventory levels.

Retailers had the most positive outlook on the economy, sharply increasing their views from the third quarter of 2019. Just 18% of shippers expect to grow inventory, though, while 48% expect further shrinking of stock levels.

On the trucking side, volume growth is expected to slow with intermodal competitiveness improving. Fifty-five percent of respondents expect truckload growth moving forward, while 13% expect a decrease. National less-than-truckload (LTL) respondents had the most optimism about growth, with 60% expecting that segment to expand, likely due to booming e-commerce sales.

The DHL Supply Chain Pricing Power Index uses the analytics and data contained in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers. (SONAR: DHLPPI.USA)

The latest FTR Shippers Conditions Index (SCI) reflects the optimism seen in the Morgan Stanley survey. FTR’s index for November stood at 7.0, rising from 6.4 the month before. All index inputs rose in November over October except freight volume, which was still positive.

“Capacity is forecast to slowly tighten over the course of 2020, which will lead to slightly worsening conditions for shippers,” said Todd Tranausky, vice president of rail and intermodal at FTR. “Truck capacity is expected to slowly increase to its historical range this year, causing shippers to examine rail and intermodal alternatives as the increased truck utilization pushes truck rates higher and makes alternatives more attractive.”

The FreightWaves Intel Group’s DHL Supply Chain Pricing Power Index (SONAR: DHLPPI.USA), which measures the negotiating power between shippers and carriers, is currently at a 40 reading, down from 45 the week before. A 50 reading indicates neither shippers nor carriers have an advantage in negotiations. Readings below 50 suggest the shippers have more power and readings over 50 give an advantage to carriers. 

Did you know?

A study by infrastructure design firm HNTN Corp. found that Americans pay $274.69 annually in combined federal and state motor fuel taxes. Conversely, a Class 8 truck with a 150-gallon fuel tank pays $83.82 in taxes per fill-up, according to data compiled by the Diesel Technology Forum.


“This will bring important court supervision.”

— Andrew Hatnay, a Toronto labor lawyer representing the former employees of Celadon-subsidiary Hyndman Transport. An Ontario judge blocked Celadon’s plans to sell the subsidiary before compensating employees following the closure. Instead, Celadon will now file bankruptcy.

In other news:

Chinese New Year leads to inventory buildup

Shippers have built up inventories ahead of the Chinese New Year, which is expected to cause supply chain disruptions. (Supply Chain Quarterly)

Spurned applicant targets Don Hummer Trucking

Police said a job applicant who did not get a job with Don Hummer Trucking in Cedar Rapids, Iowa, sent a letter with a powdery substance in it to the company’s headquarters. The powder was not harmful. (The Gazette)

US mayors conflicted on lowering Americans’ dependence on autos

A new survey by Boston University finds that U.S. mayors would like to reduce the dependence on automobiles and improve roadway safety for pedestrians and bicyclists, but they don’t support programs such as increasing parking prices or reducing speed limits that might advance that goal. (Fast Company)

US manufacturing posts surprising gain

U.S. manufacturing output rose in December as production of durable goods, food and beverages and other products increased.(CNBC)

Sustainability in supply chains takes back seat to sourcing

As the U.S.-China trade war has remade supply chains, companies are sidelining efforts to create sustainable supply chains in favor of avoiding tariffs. (Sourcing Journal)

Final thoughts

How time changes? Shippers are increasingly gaining the upper hand with carriers and are optimistic that will continue, according to Morgan Stanley’s latest quarterly shipper survey. While truck capacity may be tightening, shippers are indicating a further contraction of inventory levels. In fact, the survey found that shippers expect smaller year-over-year increases in their volumes across truckload, intermodal, regional LTL or national LTL. The good news for trucking? Shippers are indicating volume increases and as capacity tightens, rates could see a bump.

Hammer down, everyone!

Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected]