Prepare for increased truck freight rates later in 2016 even though they decreased nationwide the first half of the year.
Freight spending in North America has declined compared to 2015 even though the amount of truck freight shipments has increased. So far in 2016, truck freight rates have decreased nationwide since last year. Continuous decline of both the US and global economies in the first half of 2016 has caused consumer spending to drastically slow down and thus decrease the demand for new orders of goods to be produced and shipped. Combined with subpar exporting rates, the demand for freight carriers has fallen from 2015 levels.
Truck Freight Rates Rising in South and Midwest
Even though freight spending has declined, the second half of 2016 is veering towards higher truck freight rates, particularly in Southern and Midwestern states, with Arkansas having the largest load-to-truck ratio and Atlanta having the tightest capacity for load posts. Retail shipments have risen since Memorial Day with many high-volume lanes increasing by an average of $0.21 per mile and mid-South lanes are facing high volumes of refrigerated trucks, especially in Arkansas and New Mexico.
Freight carriers are also facing a shortage of quality truck drivers, particularly for long-haul operations. In the face of overall economic contraction, it’s become harder to attract and retain quality drivers when the demand for truck freight is not very high in certain pockets of the country. But for the lanes with the most demand this summer, truck driver pay in the face of the driver shortage is contributing to higher rates than in previous months. Refrigerated trucking is also facing an uptick in demand according to the frozen food industry. With a limited capacity in the available refrigerated trucks, you can expect much higher rates for refrigerated truck space especially during the sweltering summer months.
Technology and Truck Freight Rates
New technology in freight shipment preparation is having an effect on truck freight rates. Dimensioning machines are changing the way that truck freight shipments are calculated. Freight rates have traditionally been computed with the National Motor Freight Classification system but dimensioning machines are becoming more popular and that can lead to lower costs for shippers, even in spells of low or high demand. Dimensioning machines automate and refine the process of weighing less than truckload (LTL) shipments and maximizing space, which greatly cuts down unused and utilized space for freight carriers
This new e-logging mandate ensures truck drivers are getting enough rest on the road and logs are accurate. Preparation and implementation of new systems to comply with the mandate may affect freight rates in the latter half of 2016, as everyone must comply by the end of 2017.
If you are a shipper with concerns about how demand and new laws will affect your truck freight rates, contact RCX Solutions today at 866-336-9697. We have over 25 years of experience providing transportation solutions for customers across the country.