WCarriers have struggled to fully capitalize on high demand because of factors suppressing volumes, American Trucking Associations Chief Economist Bob Costello said March 1.
Costello prefers to look at household consumption, construction activity and industrial production to gauge how the industry is faring. All of these areas have been strong, but supply chain issues and a lack of trucking capacity have been driving down loads.
“Demand is there,” Costello said during a webinar to discuss the state of the economy and trucking. “No doubt about it, because the underlying drivers of growth are there. But we have got a supply chain problem, and that’s really our biggest constraint in the industry at the moment.”
Constricted Supply Is Contributing Factor, ATA’s Costello Says
Costello noted that in the past six months the industry has recouped about half of what it lost from early 2020 through midyear 2021, yet is still off about 5% from before the pandemic. In 2020, contracted freight was down 1.2% from the prior year. It also was down 3.2% last year, though there were improvements in the fourth quarter.
“The three buckets of freight are good,” Costello said. “What’s going on? Well, shippers are coming to their contract carriers to ask them to haul more loads. They don’t have the trucks, they don’t have the drivers. And so those shippers are being forced to put that freight into the spot market.”
Costello added that the spot market has been surging because there is a lot of freight there simply trying to get covered. He noted that in January it was up almost a 100% year-over-year. He also indicated this shows demand is not the issue,
“Demand is strong,” Costello said. “I just went through all the drivers of demand for our industry. It’s a supply problem, and that’s really what we have. Now as demand is strong and supply is constricted, what happens to price? It goes up.”
Original article posted on Transport Topics here.
