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The Trump administration’s continued tariff measures, along with current economic conditions, continue to be at the freight rate in the transportation industry.
According to the TD Cowen/AFS Transport Index released on July 15, the truck freight rate remains under pressure from the market, while it observes less than the positive change of the year because carriers manage profitability.
“Despite many international trips by world leaders, business policy is still an unpleasant image, and jobs decide to delay the expectation and seeing,” said AFS CEO Andy Dyer, CEO of AFS. “Without any catalysts for demand for demand, some telecommunications companies are declining under low volume pressure, while others are using existing mechanisms to get income.”
Extra capacity in the truck load market
The index projects a direct quarterly with a truck load rate at the bottom or near the bottom. The Q3 rate is projected to be 5.6 % higher than the 2018 base, indicating a 0.4 % reduction in three months.
A closer look, the loading market is stuck in a river, and the extra capacity of a key driver.
Aaron Lagke, VP of AFS Transportation Services, told Trucking Dive in an email: “The additional capacity can be traced to the Coveid-19 epidemic, when a number of carriers came into market because of increased demand.”
Over time, inflation increased, economic uncertainty increased and demand increased, leading to overcrowding for soft demand. “And while a number of carriers have been out of the market, these were mostly small carriers that were not very deeply cut into additional capacity,” he said.
Lagke said that over -capacity and low rates will continue unless there is a larger industry contraction or demand growth.
One of the ways the truck market can experience easy is through regulatory guidance for more strict work and language standards for truck drivers. “The policy of the Trump administration” could restrict the truck drivers, which in turn can limit the capacity of the truck and affect the market for pricing and market demand, “he said.
LTL carriers focus on profitable strategies
While the LTL market is also affected by the same global and economic conditions, transport companies participate in pricing and in turn only reduce the cost of each transportation. Weight in each cargo is 5.1 % yoy, but the cost of each cargo has dropped by 2.9 % per version.
In a low -demand environment, LTL carriers focus on profitable lines, contractual relationships, and reliable transportation instead of pricing volumes. These strategies show positive results because the TD Cowen/AFS LTL transport index report is expected to reach 65.9 % since 2018, which shows a 1 % increase over last year. The increase also shows the seventh consecutive trimester in each report with positive YOY changes.
“The continuation of the resistance to the index per pound shows the impact of carrier pricing discipline, and the future NMFC transfer to a density framework must equip the carriers in another way to firmly classify and pricing transport,” Laganke said in the version. “
Basic repairs to the motor transportation traffic classroom began on July 19, and as it adds more discipline and transparency, it is still too early to see the real impact on the LTL market, Fabriga Mish, VP of LTL pricing in AFS.
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