After a less negative spot environment over the summer, ACT Research now expects excess capacity to exert more downward pressure on truckload spot rates, according to the October installment of the ACT Freight Forecast, U.S. Rate and Volume Outlook report.
The ACT Freight Forecast provides quarterly forecasts for the direction of volumes and contract rates through 2020 and annual forecasts through 2021 for the truckload, less-than-truckload and intermodal segments of the transportation industry.
“The rebalancing trend is still valid for 2020, but we think Q4 spot rates will actually fall from Q3 this year, counter to the seasonal pattern, due to the supply/demand imbalance detailed in the Freight Forecast report,” Tim Denoyer, ACT Research’s vice president and senior analyst, said.
“We see the signs that capacity is beginning to come at the margin in some places, from company failures to lower for-hire employment data, but the industry still added about 5,000 net new tractors to the US highways last month,” he continued. “This reflects ongoing capacity additions by private fleets, as the for-hire sector isn’t the problem. This will change next year, but this rate of capacity addition will continue through year-end.”
Freight softened in recent weeks, following the Sept. 1 tariff imposition, and after a brief respite earlier in Q3, the freight recession is showing signs of broadening amid weaker industrial indicators. While holiday spending and pre-tariff inventory building may help volumes in Q4, we continue to see heightened risk of weak freight volume in early 2020 as inventories draw down.
