Posted On January 15, 2019
The new Cass Truckload Linehaul Index includes data that shouldn’t surprise anyone. When it comes to truckload rates, 2018 ended the same way it began: with continued increases. In fact, December ended with a 7.2% annual increase over 2017.
Despite the potential impact on a shipper’s bottom line, the strong closeout to 2018 should come as a relief. After all, you don’t have to turn on the TV or scroll through your feed for very long to get the impression that we are on the brink of an economic downturn.
That never-ending doom and gloom is just noise.
The data (and the experts) tell a different story.
“We expect continued nominal strength in the coming months, but slightly lower percentage increases, as comparisons grow increasingly tough in the coming months,” Broughton Capital founder Donald Broughton said in the Cass TL report. “Our realized pricing forecast for 2019 is now 2% to 5%.”
An increase of 2-5% is lower than shippers have seen in the past couple of years.
However, continued increases shine a spotlight on two realities:
- The fundamentals of the economy are still strong. Unemployment is low. Consumer spending and confidence are both high. Yes, the stock market had a bad December—but the reality that the media seems to forget are the economy and the stock market are not one and the same. Anything can happen, but most experts predict that while economic growth may not be as robust as it has been, 2019 should still be a good year.
- Shippers are going to have to continue to be strategic in 2019. A 2-5% increase in 2019 is smaller than the increases measured in 2018 and 2017—but it is still an increase. And it isn’t just trucking rates. The Cass data also shows an 8.6% increase in intermodal rates in 2018. Experts also predict those rates will continue to increase at a slightly lower percentages than in previous years—but shipping intermodally in 2019 will still be more expensive than it was in 2018.
No one likes to pay more to move their product across the country and/or across the world.
That said, higher rates reflect increased demand and a stronger economy—and no one would trade lower rates for a weaker economy. In other words, though continued rate increases could be labeled a “problem,” there are certainly worse problems to have.
Especially when rate increases are a problem our team can help you solve.
Flat World Supply Chain provides one of the easiest, most cost-effective and dependable full-truckload shipping solutions in the industry. Unlike asset-based providers, where the main priority is the utilization of their own company’s assets, the main objective for Flat World is to provide clients with the optimum combination of capacity, price, and ease of engagement. We help to remove the hassle of obtaining transportation services for your full truckload and inter-modal shipments. And we do all that with a focus on excellence shippers won’t find from any other supply chain solutions provider.
The unending rate increases of the past couple of years appear to be easing a bit. That’s good news. Most experts believe the fundamentals of the economy will continue to remain solid in 2019. That’s also good news.
But the best news of all?
Rate increases—whether they are 2% or 8%—can be mitigated and managed by partnering with an innovative supply chain solutions provider working with shippers in just about every industry.
That’s us, by the way.
And we look forward to partnering with our customers as they work to make 2019 their best year yet.
