Truckload markets will continue to be solid this year, maintaining rate stability and opening the door to further increases, fleet executives and analysts said at the recent BB&T Capital Markets transportation conference.
As reported in the recent edition of Transport Topics, many carriers feel pricing increases of at least 4% are probable this year as freight volumes in the U.S. grow and capacity tightens.
While widespread winter weather troubles last year and the subsequent catch-up made 2014 freight patterns erratic, 2015 should be more predictable.
“We are confident (The freight market) will remain (strong), going forward. Compared to the eight prior years other than 2014, demand stacks up very well,” said Derek Leathers, president of Werner Enterprises.
Swift Transportation, CEO Richard Stocking added that the forecasted 3 per cent in US GDP growth “will keep capacity drum tight.”
Thom Albrecht, a BB&T analyst, said carriers now are seeing increases in the 4%-6% range and other carriers at the conference suggested they could rise further this year.
However, shippers in attendance viewed those projections as overly-optimistic. While some acknowledged a freight services increase is in the cards, many insisted they wouldn’t be able to absorb the mid to higher end projects carriers were reporting.
Rick Schart, vice president of supply chain for discount retailer Stein Mart, said a 5% increase could add as much as 30 cents to the sale price for a piece of apparel. “We can’t price this in,” Schart said. “We are under intense pressure from our customers.”
Still, most shippers agree that the capacity situation will continue to put pressure on pricing in the coming years. One shipper in attendance predicted capacity constraints won’t hit their worst levels until 2017, while another believes that the market will be toughest for shippers late next year.
Meanwhile, the LTL market was also discussed, with experts agreeing the segment’s “renaissance is well underway” as a strengthening manufacturing sector means fleets are doing more last-mile deliveries and handling more e-commerce shipments.
Full story from Transport Topics here (subscription req).