The long-suffering freight market may be in the initial steps of a gradual recovery as excess trucks and drivers finally begin to exit the market, according to a report from ACT Research.
That trend was shown by the December edition of ACT’s For-Hire Trucking Index, which showed the Supply-Demand Balance tightening by 2.2 points to 54.2, seasonally adjusted, from 52.0 in November.
Meanwhile, the report’s Capacity Index decreased by 3.3 points compared to November, to 44.2 in December. For-hire capacity has now contracted in seven of the past eight months, and decreased further as fleet purchase intentions cratered and driver availability fell further this month, the Columbus, Indiana-based transportation research firm said.
“With volumes stabilizing and capacity contracting, the for-hire Supply-Demand Balance has been signaling an impending increase in freight rates for a few months. Truckload spot rates are 12% above the seasonal pattern in January following the cold snap. While weather effects should revert in the coming months, freight is an outdoor sport, so the cycle will likely find a higher trajectory as the reversion happens amid tightening capacity and recovering demand,” Tim Denoyer, Vice President & Senior Analyst at ACT Research, said in a release.
Denoyer added, “Capacity is still being added industry wide by private fleets, but declining US Class 8 tractor sales indicate this phenomenon is starting to slow. Unlike private fleets, for-hire capacity has been contracting, so as private fleet additions decline, tighter industry capacity should press rates up.”
As a proof point, he said the Driver Availability Index had dropped noticeably, down 4.1 points since November to 50.9 in December.
“The quality fleets in our survey have been safe havens for owner operators for the past couple years, but market dynamics seem to have finally caught up with the driver market,” Denoyer said. “While bad news for the drivers, it’s key to tightening the freight market. While weather is the larger near-term factor, driver availability is a critical longer-term factor also starting to help press spot rates up.”
