2019 was a shipper’s market. In early 2019, rates were down over 20% vs. 2018.  By mid-year 2019, the slight tightening of capacity due to rate restrictions, increased insurance costs, and ultimately carrier bankruptcies, caused rates to level off.  In mid Q3 2019, we started to see a gradual increase in rates for van and flatbed that were maintained through Q4 2019.

According to AFS Vice President of Truckload Capacity Solutions and Procurement, Steve Mitchell, “Due to 2020 disruptors, we should expect to see the market turning back more towards the carrier by summer. The best tactic to insulate your company from these market disruptors is to move away from a dependency on spot purchasing for lowest rates every day and begin to shift more towards a procurement strategy using a mix of asset-based carriers and managed transportation services.”

So, what are the 2020 disruptors?

  • Carrier bankruptcies continue at an unprecedented pace
  • ELDs cause more ruckus
  • Drug and Alcohol Clearinghouse (hair-follicle testing)
  • Gas and oil prices increase
  • Insurance costs skyrocket
  • Independent Contractor laws make CA and NJ untenable
  • Software eats the freight industry
  • Coronavirus – be ready for the inflection

With so many factors feeding into the problem, it’s no wonder that capacity will continue to tighten. Flatbed rates are expected to continue to increase well into Q3 and van rates will hit a YOY high in Q2 only to level off and remain consistent.

The truckload market will always correct itself creating equilibrium between shippers and carriers. Shippers need to ask themselves, “were we a shipper of choice and a good partner with our carriers the year before and what can I do today to minimize the impact of 2020”.

For additional information on the 2020 freight market and 2020 disruptors, please email smitchell@afs.net to schedule a call.