‘Recipe right for record rate increases’: ACT Research

by Today's Trucking

ACT Research’s For-Hire Trucking Index in July showed an uptick in freight volumes with pricing moderate, but a strong supply-demand balance for truckers.

“As volume growth reaccelerated, ACT’s For-Hire Pricing Index increased, making July’s reading the second best since the survey’s inception in June of 2009,” said Tim Denoyer, vice-president and senior analyst with ACT Research.

“With the driver market still tight, new equipment production still challenged and demand still strong, the recipe is right for record rate increases. However, driver hiring has begun to improve since the extended unemployment curtailments started in June, and response to higher driver pay rates should lead to more gradual progress.”

The supply-demand balance reflected capacity tightness. Class 8 truck supply continues to be constrained by unmet production demand related to parts shortages, ACT reported.

“With some structural driver issues likely to outlast the pandemic and a positive freight demand outlook, we do not expect the market balance to move quickly,” Denoyer said.

However, the industry analyst also acknowledged increasing risks.

“The indicators that we track and find to be reliable point to strong freight conditions continuing into 2022,” said Kenny Vieth, ACT’s president and senior analyst. “Demand for transportation services remains extraordinarily strong, and all capacity modes are straining to meet it – and a basic law of market economics is again proved: when demand outstrips supply, prices rise. With favorable freight conditions amidst constrained capacity, freight rates are expected to remain elevated.”

But he added: “However, the two most visible and worrisome unknowns in the near term are the threat posed by the rise of the Delta variant of the Covid virus and supply challenges for OEMs and suppliers, most notably but not only in regard to semiconductors. Stretching the horizon, regulations, especially emissions, stand out for increasing industry costs and volatility, while infrastructure investment offers upside possibilities for freight.”

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  • In Ontario Canada we need to fix the insurance solutions for smaller fleets and bringing in new drivers with out experience. The solution we need to take a milage tax one cent per loaded km into a gov insurance fund from all trucks and buses over 25 passenger or trucks over 15 meters or 20,000 kg and set a gov nonprofit insurance group for all taxi wheelchair accessible vans and buses and trucks that have new driver or will carry up to 2 passengers with the loss of greyhound and many other small transport companies in the last 2 years in my opinion.