Freight rates, volumes slip, according to latest For-Hire Trucking Index

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Reefer on winding road
Reefer on winding road

COLUMBUS, Ind. – Last week ACT Research released the latest For-Hire Trucking Index, which included March data. The index showed contraction in both volumes and freight rates, now at 42.4 and 43.2, respectively. Productivity, while neutral at 50.0, was likely supported by the temporary pantry-stocking phenomenon.

“Because of the talk surrounding a surge in freight driven by pantry stocking, the volume index decline was somewhat surprising, but likely reflects the start of shutdowns late in March,” said Tim Denoyer, vice president and senior analyst for ACT.

“COVID-19 is adding a new level of pricing pressure due to the sharp decline in load volumes into an already overcapacitized market,” he said regarding the drop in freight rates. “Our for-hire carriers continue to show better capacity discipline than the industry at large, which we see as a good leading indicator of tighter capacity down the road.”

Denoyer noted that, in looking at the overall picture, the drop in the supply-demand balance reading accelerated in March at 44.9 after a “modestly negative” seasonally adjusted reading of 48.8 in February.

“The cyclical bottom that was being built prior to COVID-19 has been laid low by the health crisis,” he said. “Fleets are taking aggressive actions to protect their people, including following CDC (Centers for Disease Control and Prevention) guidelines, implementing virtual meetings and orientations, limiting the use of cash, and finding creative ways to procure sanitizer.”

In other market-research news, ACT’s Alternative Fuels Quarterly shows that retail sales of Class 8 natural gas trucks in U.S. and Canada showed gains for January and February 2020.

“Sales of natural gas-powered vehicles as reported by the six major truck OEMs, who account for approximately 60% of the heavy-duty natural-gas market, were mixed in the December 2019 through February 2020 time period,” said Steve Tam, vice president of ACT Research. “Through the first two months of 2020, reporting manufacturers of natural gas-powered Class 8 units rose 29% year to date compared to the first two months of sales in 2019. For comparison, total U.S. Class 8 sales were down 23% for the same period.”

Tam continued, noting that researchers had expected the 2020 natural-gas market to drop on a unit basis but increase in penetration because of the shrinking of the Class 8 market.

“However, COVID-19 is wreaking havoc on both the economy and the commercial vehicle market, leading ACT to cut not only the total Class 8 forecast, but also the Class 8 natural-gas unit sales as well,” he said.

 

 

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