Future Insight: A 2020 Transportation Outlook
CPC Consultants featured Editorial
Posted: October 1, 2019 | Newsletter
Last year, August 2018, CPC published an editorial on predicting the impact of tariffs with aforementioned subject. We called the article, “Trump Bubble” and reported the following:” We believe that this is a short-term event and there will be a lull in demand after the tariff decisions are sorted out. So, like all bubbles, it is just a matter of time before this one pops and we see the return of normal demands.”
Today, as we look back onto what happened in 2018, we witnessed unprecedented chaos in all transportation modes and markets. The combination of artificial demand – pulling up deliveries, the driver shortage and the opportunity presented to Ocean Carriers to generate windfall profits after suffering losses for consecutive years, caused rates to spike unprecedently in Q3 & Q4 2018. Conversely, in 2019, this year we’ve seen capacity return and significant drops in volume. Bloated inventories and the trend of shifting sources nearer to the U.S. (Near Shoring) are the main contributors. This has resulted in the market shifting back to a Shipper’s Market in all modes of transportation. The proof has been our success with several Shippers of securing competitive pricing and long-term contracts in 2019.
Looking forward into 2020, this is what we see:
LTL and FTL: 5% lower than 2019 – weaker demand, more capacity, automation and uncertainty
Ocean Container and Intermodal: 5-10% lower than 2019 - Reduction of port congestion, weaker demand and over capacity will drive rates downward
Parcel: 5% higher – Strong e-commerce demand and no real threat to UPS/FedEx duopoly will allow them to continue raising rates
When we review next year, 2020 we will repeat this exercise of looking backward in order to look forward. However, the only difference is that we will be able to say that Hindsight was 2020.