News

Congratulations. You’ve made it through one of the most unpredictable, volatile, chaotic years in the history of trucking. Or as some economists like to refer to it, a “dynamic” year. As 2020 came to a close Covid-19 cases were still surging, and regional lockdowns were being implemented in various regions of the U.S. and Canada. But, the delivery of vaccines was underway, being first administered to those most at risk of infection. As the vaccine is rolled out, we can all eagerly look forward to a return to some semblance of normalcy. But what will normal look like in trucking? All signs point to a much better year than the one we just endured. Here are five reasons to believe 2021 will be a better year for the trucking industry than 2020: t’s not 2020 No one could have anticipated what 2020 had in store for global economies, supply chains, and the trucking industry itself. The good news is, a dearth of freight was short-lived and the year ended better for trucking than many could have dreamed for in April. The better news is, a vaccine has arrived and began going into arms in late 2020. This should restore some level of normality in 2021. While there are pockets of resistance against the vaccine, Bill Witte, industry forecaster FTR’s economic expert, said there will be pressure to be vaccinated – and provide proof of vaccination – to once again enjoy life’s pleasures such as attending sporting events, concerts, restaurants, or even to travel. For this reason, Witte feels even vaccine skeptics will line up to receive it, as the desire to return to in-person events and activities will outweigh fear of the vaccine itself. Rates are expected to rise Spot market rates surged in the second half of 2020, and contract rates normally follow about six months later. So, it’s little surprise that analysts are expecting contract rates to rise in 2021. FTR is projecting 8-10% rate increases this year, with truckload contract rates to lead with as much as a 10% increase. In a recent market update, Paul Kroes, market insights leader for Thermo King Americas, suggested carriers will see double-digit contract rate increases next year in the U.S. “Increases in both freight volumes and rates, along with capacity challenges, have influenced fleets to aggressively enter the market,” said Frank Maly, director of commercial vehicle transportation analysis with ACT Research. Class 8 truck orders are also surging, from a record low 4,000 units in April, to a robust 52,600 in November – also the third best month on record. “Fleets became much more confident about future freight demand and began placing large orders to replace older units and for expansion purposes, as capacity tightened. In just a few months, the industry has gone from fear, to hope, to optimism. It appears the industry has sluffed off the uncertainties about the pandemic for now,” said Don Ake, FTR’s vice-president of commercial vehicles. In addition to being optimistic about freight demand, fleets may also be concerned about supply and labor shortages at truck and trailer plants. Ake said the first half of the year will be strong for equipment orders, but if the economy doesn’t live up to expectations, cancelations could sour build rates in the second half. Driver shortage will keep lid on capacity Despite the flood of new equipment into the market next year, the driver shortage will keep a lid on capacity and keep the pricing pendulum swinging in carriers’ favor. Drivers, especially older ones, exited the market in growing numbers in 2020 to protect themselves and their families from the virus. At the same time, new entrants were limited as training schools and fleets’ new-entrant training programs were halted due to social distancing requirements, and driver licensing agencies temporarily ceased issuing new licences. Surging demand for courier and messenger jobs also siphoned off some truckers, who wanted to remain closer to home. “We have a flotilla of containerships off Southern California waiting to unload,” he said in a mid-December market update. “This bottleneck suggests strong freight volume growth will continue even after the holiday season, as retailers restock inventories.” Canadian spot market load volumes set a new post-pandemic high in the third week of November, according to data from Loadlink Technologies. The latest numbers available show November marked a record seven straight months of load volume growth. Capacity also was tightening, with 2.98 trucks posted per load, a 9% reduction from October, and 13% below November 2019 levels of 3.43 trucks per load.