FTR’s April Trucking Conditions Index dropped to its lowest level ever at -28.66, reflecting the effects of the COVID-19 pandemic. The previous low was -16.08 in September 2008.
The bottoming out in April will bounce back, according to FTR, pointing to an uptick in payroll employment in May, but the pace of recovery is uncertain. While post-April trucking conditions are expected to improve sharply, FTR predicts they will remain negative through early 2021.
“Spot market load volumes have recovered well since bottoming out in mid-April, although the recovery seems to have stalled out a bit,” said Avery Vise, vice president of trucking at FTR. “The critical question is what happens once consumers and businesses exhaust the trillions of dollars that Washington has pumped into the economy to offset the pandemic’s financial consequences. All that we can be sure about is that market conditions will not be as bad as they were in April.”
ACT Research highlighted similar findings in the June installment of the ACT Freight Forecast.
“Freight market stabilization progressed this month with a strong rebound in spot rates,” said Tim Denoyer, ACT Research’s vice president and senior analyst, adding that the number of trucks parked in April “was likely into the six-figure range, and the increased unemployment benefits incentivized drivers not to return to work in the near-term.”
Although there is “capacity tightness,” Denoyer noted this was due to fewer drivers on the road, which “is much easier to solve than tightness because of too few trucks.” The record number of qualified drivers ready to hop back into the cab will help resolve the current imbalance “relatively quickly.”
“We see the Class 8 tractor capacity balance tightening for the first time in two years, as this latent capacity is absorbed, As a result of the equipment supply shock from the pandemic, our confidence in a significant freight rate cycle on the longer-term horizon is reinforced,” he concluded.