Analyst: Trucking Industry Faces “Stronger, Longer” Peak Season

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Trucking industry appears to be heading for a ‘stronger, longer’ peak season as backlog of container ships worsens at ports and capacity is unlikely to be slack anytime soon, analyst says Of the industry. Meanwhile, an economist said employment in the industry has likely reached pre-pandemic levels.

The shipments component of the Freight Cass index rose 12.3% in August, compared to the same month in 2020, but growth is expected to moderate to mid-point through the end of the year. The moderation can be attributed to more difficult comparisons in the second half of 2020. Tim Denoyer, analyst for ACT Research, is the author of the Cass Freight Index report.

“The recovery from a slippage in June and July amid further slowdowns in rail volumes suggests that trucking is falling behind railways, currently being scolded by chassis shortages,” Denoyer wrote. “But shipping volumes remain limited by the capacity of the freight network, as evidenced by the order book of about 125 container ships anchored off North American ports.”

Southern California ports recently hit a new record of 49 container ships at anchor, and the order book “clearly represents a stronger and longer than average peak demand outlook.”

Denoyer expects more pressure to be put on the trucking industry to handle freight as intermodal volumes decline. He noted that a shortage of intermodal chassis following tariffs of over 200% on imported steel in May “is one of the main reasons chassis production has been dismal this year and the intermodal network was short “. Class 8 trucks, the largest class of trucks, also face supply chain issues, which contributes to limited capacity.

According to WardsAuto.com, Class 8 retail sales in the United States rose 2.8% to 18,176 in August, compared to the same month in 2020.

In a report from ACT Research, Denoyer again underlined intermodal chassis issues and freight market tension leading to a “clearly historic peak season … In the midst of perhaps the strongest freight demand of all the times, the US chassis fleet is shrinking because of these tariffs, making the situation difficult to correct quickly. We expect intermodal volumes to be impacted during this peak season and beyond. “

He also said the chip shortage “might have some light at the end of the tunnel, but it continues to slow the growth of equipment capacity. And the Delta variant, which has exacerbated the chip shortage, could also have an impact on the nascent and gradual upturn in pilot supply. “

In a recent webinar, Aaron Terrazas, Director of Economic Research for Convoy, said he expects a strong holiday shopping season, especially online shopping. But unlike last year, he expects more last mile capacity to be available this year. He added that grocery spending has stabilized, with restaurant and bar spending above pre-pandemic levels.

Meanwhile, Terrazas expects employment in the trucking industry to likely return to pre-pandemic levels. This was based on an analysis of data from the Bureau of Labor Statistics (BLS) which showed that carriers added 5,400 workers to their payroll in August.

While employment in the trucking industry has improved over the past three months, driver capacity remains limited, Denoyer said.

The ACT Driver Availability Index continued to improve this month and the BLS trucking employment trends continued to improve despite slower job growth in the nationwide, “he added. “The effects of the pandemic, driver demographics, e-commerce driving jobs, and the Drug & Alcohol Clearinghouse are lengthening the rate cycle, but we expect economic incentives to eventually outweigh them. secular supply constraints for conductors. “

According to the expenditure component of the Cass Freight Index, the total amount spent on freight increased 42.2% in August, compared to the same month in 2020.

Terrazas noted that the increased rates that shippers have faced can be attributed to higher wages for drivers. He said he doesn’t expect rates to go down in the next six months, but that they could start going down next year if capacity slackens. But the capacity is not expected to decline in early 2022, he added.

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