What will happen with freight rates in 2020?
This year was a tumultuous one in the trucking industry, as It was comprised of industry-shifting changes and unstable freight rates. In any case, the future of trucking continues to be uncertain as freight rates basically plummeted throughout 2019.
Nonetheless, as prices start to drop, the industry will also begin to react negatively, which is what we saw happen in 2019.
As brokers began to drop prices on freight, trucking companies had no choice but to continue taking their loads. Because of this, brokers continued to drop prices further, and trucking companies only continued taking loads.
The freight market was impacted by a variety of reasons, but mainly oversupply of capacity and the continuous trade war, according to Freight Waves.
Additionally, as private fleets expanded in 2018, they offset the balance of for-hire trucks, ultimately driving down the price of spot rates in 2019. The market should readjust, however, as private fleets begin to reduce internal investments.
Going into 2020, freight rates will also likely be affected by the United States’ reported trade deal with China. According to CBS News, the deal cut or postponed some tariffs and committed China to purchase up to $200 billion from U.S. farmers.
While the deal is yet to be finalized, there is still a swath of uncertainties that have not been addressed. As the deal continues to progress, the trucking industry may get a better view of what’s to come in 2020.
Another factor that will likely cause some changes? Technology, and how it’ll continue to be integrated into the trucking industry.
For one, there is an expectation that as the industry continues to adjust to the ELD mandate, freight rates can rise drastically.
As brokers adjust to the time changes needed to deliver a load caused by the mandate, there’s reason to believe they’ll have no choice but to pay more in order to get their loads delivered quicker.
Another option for brokers may be hiring team drivers to deliver their loads much faster, but that could prove to be even more costly for them. Of course, there is still an abundance of other factors to consider, but a rise in freight rates could be impending.
According to Freight Waves, data and technology could be a key to managing the uncertainty in the industry, as supply chain and logistics tech spend is projected to rise to nearly $88 billion by 2022.
Overall, 2020 is likely to be yet another roller coaster of a year for the trucking industry. So, what do you think about freight rates? Have you still managed to negotiate good rates? Let us know in the comments or on social media!
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