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Securing US Truck Contract Capacity to Dominate 2019

Wednesday, January 16, 2019 11:59 am MST

By:

William B Cassidy

Chuck Hammel doesn’t know what 2019 will bring, but he knows his trucking company has to prepare for it. “Really, who can look that far ahead?” he told JOC.com at Pitt Ohio Group headquarters in Pittsburgh in mid-October. “You can’t predict the future, but you do have to be ready for it. The best thing I can do is ensure my company is prepared.”

Heading into 2019, US shippers, their partners, and suppliers should all cleave to the Boy Scout motto, coined by Robert Baden-Powell in 1907: be prepared. “We have to plan for a robust 2019 and for a downturn,” Hammel said. “That’s about all you can do. You have to keep listening to your customers, what they want, and look internally at how you can do business cheaper.”

The US economy remains healthy heading into 2019, but global headwinds are building. US manufacturers signaled a strong start to the fourth quarter in October, according to IHS Markit, with the company’s US manufacturing Purchasing Managers' Index (PMI) rising from 55.6 to 55.7. The eurozone economy, however, expanded at its slowest rate in more than two years.

A new survey from Citi Research suggests shippers are over the sticker shock of US truck rates and may have more leverage in late-year contract negotiations. It’s not nearly as difficult to find a truck now as it was in January or February, shippers told Citi Research. Talk of a 5 to 8 percent increase in contract rates in 2019 is now giving way to chatter of 1 to 5 percent.

That’s a remarkable shift in a short period of time, and it may not be the last. A fresh influx of imports ahead of new US tariffs on more than $200 billion in Chinese goods orginally scheduled to take effect on Jan. 1, but now postponed to March 1 as a result of the US-China ‘truce’ agreed to at the December G20 meeting, could snap up capacity. That could make January and February extremely slow in comparison with 2018, before the spring shipping peak begins in March or April.

Citi Research, spot market volumes, and anecdotal evidence suggest shippers in late 2018 are less reliant on the spot market and making more and better use of contract carriers, a sign that they made progress on sorting and resetting supply chains that were disrupted and distorted by high demand and the electronic logging device (ELD) mandate in early 2018.

Click here to read a the full article about the 2019 forecast for the trucking transportation industry.

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