Truckload overcapacity will bottom
Truckload, intermodal rates expected to firm next year
By Dave Hannon -- Purchasing, 6/10/2009 3:59:00 PM
The overcapacity that has been keeping truckload rates at rock bottom will moderate next year, pushing more freight back to the intermodal market, according to one market analyst. In a recent note to investors, Thomas Albrecht of Stephens Inc. says, “we believe excess truckload capacity will be worked off by spring 2010, meaning that cheap truckload rates in spot and backhaul markets would have moderated.”
At the same time, Albrecht says diesel fuel prices will continue to rise, making intermodal a more attractive option to shippers. As a result, “intermodal pricing will firm in 2010, with the possibility of rate increases occurring during the second half of 2010 and especially into 2011.”
But the current truckload market provides little evidence of a recovery. As reported on Purchasing.com recently, the quarterly “State of the Freight” report from Wolfe Research found that 91% of shippers polled in the first quarter reported overcapacity in the truckload market and a record 44% of those classified the truckload market as having “extreme overcapacity.”
According to a recent analysis by Stifel Nicolaus & Co., truckload volumes have not improved in the second quarter, pricing has “intensified” and most carriers are no longer experiencing a benefit from the lag in fuel surcharges. “In addition, we believe that many truckload carriers are being shown leniency from their banks which is slowing the exit of industry capacity,” says the report.
And a report from KeyBanc Capital Markets says “contractual dry-van rates continued to deteriorate in April, reflecting aggressive bid activity over the past several months, and now stand at their lowest levels since November 2005.”
“In our view, spot rates will likely benefit from firming capacity, but aggressive bidding over the past several months will likely continue to negatively impact contractual rates, which will be implemented over next several months,” the KeyBanc report says.
Truckload rates are set to rise
07/15/2009Truckload Rates to Drop
06/18/2009
Now Playing: 
