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Full truck load market insight

Full truck load market insight

Big US truckload operators drive profits despite slowing volume: William B. Cassidy

Posted: October 1, 2019 | Newsletter

The leading US truckload carriers are increasing profitability and growing freight despite an overall sliding trend in shipping volumes. Some of those carriers are also decreasing earnings expectations, however, as 2019 shapes up to be a gradual, lower year than the “annus mirabilis” seen 2018.

That was certainly true in the first quarter for J.B. Hunt Transport Services, at least on the over-the-road side of its business. J.B. Hunt’s dedicated trucking revenue spiked 21.7 percent year over year during the period, while truckload revenue increased 9.9 percent. Committed loads and truckload volume were up 19.9 percent and 4.2 percent, respectively, and revenue per loaded mile grew, too.

On the contrary, in J.B. Hunt’s main intermodal business, load volumes declined by 7 percent from a year ago, with about half of that drop credited to troublesome weather in Chicago and rail lane closures. Intermodal revenue grew 2 percent overall, but operating profit dropped 10 percent due to higher costs.

Truckload pricing has been impacted, with spot market rates that increased by double digits in 2018 decreasing by similar numbers in 2019.

Miserable spot rates are fairly attributable to the growth of trucking capability in the second half of 2018 and first months of 2019. New Class 8 registrations (New Trucks) grew all but 20 percent in January and February. That capability is expected to tamp down price increases for US truckload shippers in 2019.

US GDP grew 3.2 percent in the first quarter but GDP received a shake from high inventories, higher exports, and a cut in imports, which are a drag on GDP.

Several freight market indicators took disappointing turns in the first quarter. Truck tonnage fell consecutively and was growing at a slower annualized pace. One index dropped 10.5 percent from the fourth quarter, its biggest fall since 2011.

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CPC Commentary:

2019 has shifted into a Shipper’s market place. Equilibrium has been restored and it is a good time to secure capacity and contracted rates with carriers. Shippers who had contracts with carriers during the 2018 capacity crisis fared much better than others who rode the spot rate market and were subjected to usurious rates. Contact CPC now to secure the best service and price combination with carriers while the opportunity exists in this market. 

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