After a tumultuous 2020, experts in every industry are attempting to plan and predict what we can expect for 2021. FreightWaves, The leading provider of trucking news, media, and analytics, recently released a white paper - The 2021 Trucking Carrier Outlook: Planning for asset utilization, pricing, and volumes in uncertain times - that we found extremely handy. You can access the full white paper here, or keep reading for our main takeaways!
Generally speaking, the white paper paints a hopeful picture for trucking carriers, though we should all be ready for a downturn should a double-dip recession occur. And with so much uncertainty surrounding the COVID-19 vaccine, it’s difficult to predict when the economy will be able to shift a percentage of its spending back into services, which will impact the goods demand that lifted the freight market in 2020. The white paper landed on the following three main points:
1: Capacity crunch
First and foremost, carriers will be focused on adding more capacity into the market this year. In fact, Class 8 orders increased well above 2019 fourth quarter levels, though we must bear in mind that November and December orders from 2020 won’t be fulfilled until June of this year. Which means, you guessed it, carriers will have a tough time adding to their fleets in the near-term unless they turn to the used truck market. And of course, the continued driver shortage won’t make adding capacity any easier, especially as driver schools aren’t able to fully open due to the ongoing pandemic.
2: Pricing uncertainty
One thing is for certain, pricing will not improve in the first half of 2021. But it’s not all bad news! Experts predict that contract and spot prices will move closer together throughout the year as a result of increasing contract rates and slowly falling spot rates. In a nutshell, per the FreightWaves white paper, “Market experts anticipate that a gradual increase on the supply side, combined with an increase of contracted rates, will help moderate spot market prices throughout the year.”
3: Shipping volume expectations
E-commerce is expected to continue to grow, and consumer expectations will continue to surge. Additionally, volumes are predicted to remain above previous-year levels through most of the first half of 2021 due to inventory replenishment. Since the first half of 2021 will likely continue to keep people at home, forecasters are predicting that shippers will continue to have carriers moving increased volumes in order to create larger safety stocks and help prevent a repetition of 2020 stock outs - such as the toilet paper outage. Experts believe things may begin to shift during the second half of the year, as warmer weather and a hopefully receding virus drives people to start spending more on services versus goods. A return to 2019 levels is unrealistic to expect at this time, but all of this is subject to change.
FreightWaves believes that uncertainty will continue to be the name of the game—and we agree. Shippers will be keenly focused on securing reliable capacity and predictable prices while carriers’ focus will be on driving operational efficiencies, higher asset utilization, and controlling costs. As carriers and shippers alike struggle to find creative ways to flourish amidst the chaos, we at SemiCab are certain of one thing: collaboration is the answer. Finding new ways to work together, so that we may all thrive is the only way to bolster the freight industry as a whole.
As a Collaborative Transportation Platform, SemiCab promises to do just that. We facilitate communication, enable collaboration, and bring much-needed transparency to the long-haul freight industry. How? We use API-based load tendering and pre-built integrations with TMS and ELD partners to have an aggregate view of freight demand and capacity supply across our ecosystem of shippers and carriers. And then we use AI/ML predictions with our proprietary optimization model to create fully loaded trips. That’s how we create efficient, one-way capacity, and increase utilization of both private and dedicated fleets. The result? Shippers pay less and carriers and drivers make more.
Want to find out more about Collaborative Transportation Platforms? Download a complimentary copy of Gartner’s full report, “Market Guide for Digital Freight Models for Road Transportation” for more details.