Analyst predicts impact of cheap oil: less cargo, lower rates

BEAVERTON, OR – An analyst with DAT Solutions says lower crude-oil prices will put downward pressure on freight rates, particularly in oil producing areas such as western Canada.

In a blog post entitled Energy Bubble Bursts; New Freight Markets Emerge, industry pricing analyst Mark Montague says the low price of crude has already prompted some major energy companies to announce plans to shut down drilling projects, and smaller companies are reworking their plans for 2015.

“The impact on trucking freight is twofold,” he said. “First, there will be less oil-industry cargo to move, including drilling equipment and infrastructure items, such as pipe and controls. Second, there will be less competition for drivers from this sector.”

Montague said these factors will combine to increase downward pressure on rates, which started to drift lower last week.

“That trend is assisted by the declining fuel surcharge,” he said.

Montague believes U.S. freight patterns will shift, with focus on the Southeast which has been cited as a high-growth area for housing, and where port activity is heating up.

You can read the full blog post here

 

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