Corrected Transportation Vision for 2020 Coronavirus Outlook

2020 is shaping up to be a Shipper's Year

Posted: February 19, 2020 | Newsletter

Charles Popick, Principal

2020’s prediction in 2019 was a declining overall economic condition that will most likely continue to extend to the freight market in 2020. According to the International Monetary Fund, “The global economy is in a synchronized slowdown and we are, once again, downgrading growth for 2019 to 3 percent, its slowest pace since the global financial crisis.

Since February 1st, the economy has slowed down further with the Coronavirus outbreak. This has cascaded into declining demand in all modes:

Trucking:

It will be a forgettable year for freight demand, though a bottoming process is likely to begin in the second half of 2020 that, if various factors break right, could presage brighter days for 2021, a transportation analyst said.

Benjamin J. Hartford, analyst for investment firm Baird, said freight volumes will suffer during the year’s first half and, at best, stabilize during the second. A “less-bad” scenario may be the most realistic outlook for the July-to-December period, Hartford told the SMC3 annual winter meeting in Atlanta.

The healing process will be gradual and painful, Hartford said. U.S. industrial activity, after what may have been a head fake-like firming in December, appears to be softening again, he said. None of the usual “channel checks” — analyst lingo for discussions with supplier, shipper and carrier executives–are leading Hartford to believe an upturn is imminent, he said.

“Stabilization is the name of the game” in 2020, he said, adding that “we will test the trough in growth” over the next few weeks.

International Transportation:

LONDON (Reuters) - Global air freight started to weaken again last month, after improving in the final quarter of 2019, a worrying sign the nascent upturn in the global economy was running into trouble even before the coronavirus crisis worsened.

Air freight is a coincident rather than a leading indicator of economic activity, but because cargo data are available more quickly than other statistics, they can act as the canary in the mine, warning of wider changes in the economy.

Air cargo growth through major hubs such as Hong Kong, Singapore and London’s Heathrow began to decelerate in the middle of 2017 and by the end of 2018 was falling year-on-year.

Air cargo volumes weakened again in the first month of 2020, suggesting the upswing was running out of steam even before the coronavirus epidemic shutdown much of China’s manufacturing sector in February.

Hong Kong International Airport, the busiest air cargo hub in the world, reported freight volumes were down almost 11% in January compared with the same month in 2019 and 14% compared with 2018.

Final Thoughts: Act Now for your bottom-line. If your company hasn’t reviewed its transportation program this year then NOW is the right time. Keep in mind when you engage CPC , we always add an ALL or NOTHING performance guarantee: If CPC fails to reach the guaranteed savings amount, then the client pays nothing.                   

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