Posts

Trucking Outlook 2020: Trade Deals, Tariffs and Tech (Oh, My!)

At this point, making predictions for the trucking market feels almost like playing roulette. In an industry that’s widely understood to be quickly cyclical and dependent on quite literally dozens of factors, it’s almost anyone’s guess how the market will fare even a few months from now. 2018 will be remembered for having two of the best quarters for revenue in trucking’s history, but 2019 was slower, due to tariff uncertainty, excess capacity in the market and many companies holding excess inventory.

As for 2020? The evidence is difficult to interpret.

“We typically look for clues from the past 12 months that offer insight into the next 12. Those clues are less obvious this year, though, because 2019 sent a flurry of mixed signals,” says a new DAT report. “There were the negative signs: Air and sea cargo were down, railroad volumes were subpar, and manufacturing slumped. On the positive side, truckload freight increased 4 percent year over year, and the spot market grew even faster. Dry van freight volumes were especially strong. 

“2020 is going to be a very, very tough year,” says Kenny Vieth, ACT Research President. But Agforce experts aren’t so sure about that … not all of them, anyway. 

“2020 should be a better year for logistics than 2019,” says Andy Tuley, Vice President of Business Development at Agforce. “Some of the bankruptcies that have happened recently should cause capacity to return close to equal and the market should tighten. This should push rates up to a level that should help carriers with cash flows. It will allow more even distribution in the marketplace.”

Michael Preisinger, Managing Director at Agforce, believes, based on his conversations with trucking companies and customers, that “the domestic transportation market will begin to tighten in the spring. Most of what I am reading is saying the same. By spring we should have clarity around the trade agreement with China which will give companies a better idea of how to invest in their business. Also, the large number of trucking companies that have gone out of business in the last year will leave the market with less capacity as transportation volume increases in the market.

China is on other experts’ minds, as well. “Market volatility will be a big player in the market next year, especially with some of the political issues across the world,” says Brian Phipps, Agforce Director of Carrier Sales. “Fuel prices will be a significant player as tensions in the region play out, while the trade deal with China will continue to have a real impact on volume at our ports.”

“Trucking companies will need to be aware of international trade deals and tariffs,” says Brett Eckinger, Director of Sales at Agforce. “They also need to prepare for the upcoming drug enforcement policies that will make it harder for drivers to fail a drug test and move on to another company. Those will be reported in ways that make it impossible for truck drivers to seek employment elsewhere.”

“Carriers with parked trucks that they aren’t able to fill due to the drug testing changes are likely to miss some of this upcoming tailwind,” says Tuley. 

For companies shipping product, the 2020 outlook is fairly positive, thanks to trends in technology and intermodal shipping. “We’ll see better tracking and tracing, and true AI load matching, says Director of Agribusiness John Kuhlmann.

“The digital marketplaces are actually starting to become digital,” says Tuley. “The idea has been there, but the back office part is really still pretty manual. Now that Convoy has announced they’ve become fully digital in select marketplaces, I expect that trend to continue at a quicker pace in 2020. I think we’ll see some consolidation among providers and a few ‘leaders of the pack’ emerge in this space.”

Intermodal, too, should be trending positively. “We’ll see intermodal getting healthier,” says Eckinger. “I think we’ll be able to utilize it a bit more in order to deliver customers’ goods more efficiently.” 

“The rails should see positive growth,” says Tuley, “as long as trucking rates rise to where business can shift back to intermodal. Volumes were very low there in 2019.” 

“Overall, there will be more situational opportunity in 2020 than there was in 2019,” says Kuhlmann. “With the carriers that have shut down and capacity utilization at almost 100%, supply isn’t meeting demand. There will be a lot of chances to fill that gap.” 

Want to understand the best ways to capitalize on the opportunity and volatility of 2020? Call Agforce at 877.367.2324 or email us at inquiry@agforcets.com.