Trucking executives were on hand on May 19 to discuss freight markets at the 13th Annual Wolfe Research Global Transportation & Industrials Conference. The panel format covered topics like demand, pricing and a potential restart.
Overview of freight trends
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TL rates and capacity
Bedard said contract rates are seeing some pressure, but he doesn't believe the recently negotiated softer rates will stick in six months' time as the economy ramps higher. He said TL rates are holding up better in Canada than the U.S., noting gross margins have been protected. The company has little exposure to the spot market.
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Regarding when rate per mile increases, all three participants on the panel see this happening on a sequential basis at the end of the third quarter or early in the fourth. Ekberg said it would take a peak season and capacity leaving the market to happen. On a year-over-year basis, Ekberg doesn't think rate per mile will move positive until 2021.
Fuller believes rates could move higher year-over-year in the third quarter/fourth quarter time frame, but said "a lot of capacity" has to come out of the market. Fuller sees recent paycheck protection loans as the biggest impediment. "Stimulus has propped up marginal carriers that would have gone out of business otherwise." He said if there was another round of stimulus, the unfavorable capacity and rate dynamic will be prolonged.
On capacity, Bedard said most small carriers are financed by a bank that "doesn't want to be a trucker" and will look to keep them open as best they can so they don't have to take possession of the assets.
Brokerage, dedicated and used truck prices
On dedicated opportunities, Ekberg said there are plenty of good opportunities to capture incremental dedicated freight, although he acknowledged it is tough to tell if shippers are spooked by the expected capacity purge from bankruptcies, cost inflation, increased regulation, etc., or if they are looking to lock in three-year contracts on truck capacity in a weak rate environment.
Fuller and Bedard see favorable tailwinds for dedicated demand, but noted several carriers that aren't traditional dedicated players are now bidding on the freight, creating a headwind as they haven't engineered a dedicated network and aren't pricing the freight correctly.
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Photo: Jim Allen, Freightwaves
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