COLUMBUS, Ind. – A freight recession is possible, and a rate recession is likely, according to a new freight forecast report from ACT Research.
Its ACT Freight Forecast: U.S. Rate and Volume Outlook found that dry van rates, net of fuel surcharges, have fallen 15% year-over-year in the first quarter and are likely to drop 20% year-over-year in the coming months. Freight growth has slowed materially, ACT reported.
Headwinds for carriers include tariffs, tighter financial conditions, an industrial slowdown, housing and auto softness, and fast private fleet growth.
“Truckload spot rates are set to soften further due to tractor capacity additions, pulling the contract rate market down by mid-year. LTL rates will be most resilient and continue to rise due to the unique dynamics in that market, but TL and intermodal rates are heading lower,” said Tim Denoyer, ACT Research’s vice-president and senior analyst.
Of concern, is the slowdown in freight demand is coinciding with a ramp-up in truck capacity.
“While this presents risk of a freight recession in 2019, we do expect the U.S. consumer to keep volumes growing, just very slowly,” Denoyer said. “Critically, this slowdown in freight is happening just as truckload capacity is accelerating. After growing less than freight for most of last year, truckload capacity has accelerated to 7% year-over-year growth in early 2019. We think this is the key story behind lower spot rates and why the pricing pendulum is starting to swing to the shipper.”