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Industry Updates – May 6, 2020

Posted by Mihlfeld & Associates on May 6, 2020 2:46:22 PM

Non-essential businesses are resuming operations in at least 24 states in May. While the argument remains on whether it is too soon or not, it is none too soon for the trucking industry. April saw historic lows in the Load-to-Truck ratio and with restaurants nationwide not operating fully, or at all, as produce season isn’t bringing the boon many hoped. However, there is opportunity for a small uptick in May, the only question remaining is if some predictive models are correct, does reopening non-essential businesses too early just make things worse further down the road. Even with some economies beginning to reopen, second quarter predictions are still down by double digits with most hoping for a rebound by the end of the 3rd quarter and expecting it by the end of the year. The biggest factor in rebounding the economy is consumer confidence and a vaccine cannot come quickly enough to instill that level of confidence.

Domestic Trucking

  • 35% of small fleets and independent operators have ceased all operations since the beginning of the year according to a survey conducted by Overdrive during April 22-27. Another 55% responded they were running far less than usual.
  • There is measurable uptick in loads posted to the DAT boards in the past week that are being attributed to the beginning of produce season.

Ocean Freight

  • Carriers have done a great job thus far in slashing capacity to maintain stable pricing. As the demand plummeted, ocean carriers were able to cut costs quickly by cancelling sailings and docking ships to reduce available capacity. Their overall revenue will suffer but it is the only way they can keep their heads above water in a global economy that is still constricting. As long as economies and demand return sometime in the 4th Quarter, at least the top 10 ocean carriers should be able to avoid bankruptcy.

Air Freight

  • Air cargo capacity is down anywhere between 25% and 35% compared to the same time last year and pricing is all over the board. Freight forwarders are doing their best and can generally find space, but the pricing is unpredictable with some quotes only being valid for an hour. While prices fluctuate so much from day-to-day and lane-to-lane it is hard to show completely accurate pricing trends over the course of the pandemic for each lane. It is accurate to say that most lanes have increased by 300% or more.

Topics: Insider, Logistics Management, Shipping, COVID-19

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