With 2021 right around the corner, most shippers are still fully-engaged in trying to finish out 2020’s shipping needs as efficiently and cost-effectively as possible. Everyone has done the best they can weathering the freight storm of 2020, but many are wondering if 2021 will bring that much relief or be as volatile as the past 10 months. We at M&A don’t have a crystal ball telling us exactly what 2021 will bring, but we do have a fair forecast of what to look out for in the next year.
Beyond almost every prediction, COVID cases continue to rise as we enter late November, further hindering the economic recovery and reprieve that the logistics industry desperately needs. Even though the economy is trending upward, most companies are still reeling from supply chain disruptions. The coming of Peak Season likely brings a demand increase as much as 50% compared to 2019, which will result in increased rates and transit.
On July 1, 2020, a new trade agreement between the United States, Mexico, and Canada will replace the 25-year-old North American Trade Agreement (NAFTA). On January 29, 2020, President Donald Trump signed the U.S.-Mexico-Canada Agreement (USMCA), a bipartisan agreement that has been ratified by Mexico and Canada. Each country has its own name for it:
Hours of Service (HOS) Regulations have been lauded by some as pivotal to roadway safety and loathed by others who feel they are heavy-handed. The Federal Motor Carrier Safety Administration (FMCSA) operates under the authority of the United States Department of Transportation (US DOT). The current hours of service regulations have been in effect since 2012 and are now being eased in some areas to give commercial drivers a little more flexibility in how they use their on-duty hours and off-duty hours. The proposed changes are expected to become the new law of the land in September of this year (just in time for the 4th quarter economic rebound everyone is hoping for).
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.