Truckload Capacity Shows Signs of Easing
The recession hit the trucking industry hard. Industry experts estimate 20 percent of all truckload capacity was lost.
Since the recession, according to The Journal of Commerce (JOC) Truckload Capacity Index, capacity issues remained largely unchanged. However, industry reports hold hope of some relief for shippers as they move into the holiday season.
JOC predicts a possible "tick upward" for third quarter truckload capacity, but also factor in the softening freight demand.
Another report, the Cass Truckload Linehaul Index, measures market fluctuations for truckload costs and showed a flat result in September for the third straight month (109.5). Cass reports only a 0.5 percent increase in truckload rates from the prior year.
Morgan Stanley's Flatbed Freight Index is showing greater flatbed freight capacity when compared to the same time in 2009 to 2011.
The results point to a steadying balance between capacity and demand.
Supply and Demand
Truckload capacity is riding on Gross Domestic Product (GDP) performance.
As Odyssey Logistics & Technology (OL&T) Senior Vice President of North American Logistics, Glenn Riggs, explains it,
"Since the 2009 recession, trucking capacity was reduced from the markets. As a result, the old supply and demand balances have been altered.
Truck capacity now has a closer edge to demand and there is less reserve capacity, meaning it takes less of a demand spike to create a shortage.
The whole market hinges on what the economy is going to do.
So while GDP dropped to 1.3% in the second quarter of 2012 and truck tonnage has recently trended flat, if U.S. GDP raises back up to 1.8% - 2.4%, trucking capacity could change again."
Undoubtedly, shippers have increased freight space on their holiday wish list.