728 banner ad
220 banner ad

May Freight Forecast: What Impact on Freight Rates from Pre-Tariff Freight Surge?

| June 7, 2019

Pricing power is rapidly swinging from the service providers back to the shipping community

ACT Research raised near-term freight volume forecasts to estimate a short-term pre-ship ahead of the threatened tariffs on the remaining $300+ billion of China imports.

Tim Denoyer, ACT Research’s Vice President and Senior Analyst, said, “Timing is uncertain, but assuming some talks, there may be enough to temporarily snatch the cycle from the jaws of freight recession in the near-term. But the mid-term freight outlook is hurt by the recent yield curve dynamics, and pre-shipping will eventually result in an inventory overhang.”

This dynamic did not change ACT’s rate forecasts materially, and the ACT Truckload Spot Leading Indicator reached a new cycle low this month. ACT’s Freight Rate Barometer, a measure of supply/demand balance, shows the truckload market has been oversupplied for about six months, and it typically leads truckload contract rates by about six months.

Denoyer added, “Pricing power is rapidly swinging from the service providers back to the shipping community, due to accelerating tractor capacity growth and soft freight demand. Truck orders are down sharply, a potentially auspicious sign, but eyes now turn to June orders for an early look at 2020 demand.”

Category: Featured, General Update, News

Comments are closed.