Fuel prices will decline by 10 cents per gallon, for at least part of the year, but they will remain high relative to carrier revenue. As the fuel price — and surcharge — declines, the line haul portion of the rates will increase to compensate, so the total rate paid to the truck should remain stable to 2% higher over the course of the year. (For more details, see my discussion with Peggy Dorf about the economy in 2013.)
Seasonal rates will rise for all trailer types in Q2 on the spot market, to an atypically high peak, but the increases will not be sustained throughout the year. A Q2 spike is normal on the spot market, but this year it should be exaggerated because of demand-related issues: (1) Flatbeds will be in high demand to haul construction materials and equipment to the East Coast for post-Sandy re-building, and to support increased oil drilling in the Upper Midwest and South Central states; (2) There (hopefully) won’t be a repeat of last year’s spring freeze and prolonged summer drought, which depressed reefer freight volume and rates during produce season; and (3) Pressure on capacity for other equipment types will affect vans as well, because carriers with multiple trailer types will accept the high-payng.freight first and leave the van trailers in the yard. Van-only fleets should find themselves in a strong negotiating position, especially for time-sensitive freight.
Capacity should be adequate, with short-term, localized shortages. Class 8 truck sales were robust in 2012, but the net increase in drivers is not keeping pace. As soon as the economy revs up, transportation industry publications and analysts will start fretting about the looming capacity shortage, problems with driver retention, rising freight rates and all the other “risks” of economic growth. I predict that economic growth will be tepid in 2013, at best, so capacity issues will be mostly confined to local and seasonal shortages.
Truck freight tonnage will increase by 2.0%, and spot market freight availability will grow 5.0%. Last year we saw a 3.4% increase in tonnage compared to 2011, according to the ATA For-Hire Truck Tonnage Index (not seasonally adjusted.) That was good, but not as robust as the 5.7% growth of 2011 vs. 2010. Looking ahead to 2013, we may see a flat or negative freight tonnage index in Q1, followed by a strong Q2 and a rebound in the rest of the year. I’m expecting a 2.0% to 2.5% uplift for overall tonnage in 2013. Spot market demand — meaning demand for trucks — rose by 3.1%.in 2012, with 7.5% growth in van and reefer freight availability balanced by a 2.0% drop in loads designated for flatbeds. In 2013, freight availability should rise for all three major trailer types (see discussion of seasonal rates, above.) Net prediction: the spot market in 2013 will look more like 2011, with 5% growth.
Consolidation among freight brokers and 3PLs will affect individuals and companies, but there won’t be a big impact on the overall market in 2013. The $75,000 bond requirement kicks in at mid-year, but enforcement is likely to lag. Some small brokers will not have sufficient financial resources to secure a bond at that new level. The effect of the bond won’t be felt immediately, but we expect to see a trend toward consolidation among intermediaries. Large brokers and 3PLs will buy smaller ones, and some independent brokers will become agents or retire from the business. Trucking companies may forge tighter relationships with brokers, rather than establish a brokerage entitiy with its own authority and bond, that is separate from the trucking company, as required by law.