Low diesel fuel prices and increased availability of trucks in the spot market will keep transportation costs down for retailers and manufacturers, while causing pain for the freight and logistics industry, according to industry analysts.
Growth in freight volumes slowed in the final months of 2015 after a strong start to the year. Shippers are having an easier time finding trucks to hire as a result. That’s giving them power to demand cheaper rates, reversing the dynamic seen for much of 2014 and early 2015, when trucking companies could charge higher prices because they knew shippers had few alternatives.
“This market’s pendulum is swinging in favor of shippers,” analysts with Cowen and Co. wrote in a research note Thursday.
Even intermodal carriers, which carry freight over long distances using a combination of trains and trucks, are seeing prices drop for 2016. One third-party logistics executive told Cowen analysts, “economic signs for 2016 overall are not promising.”
But transportation analysts with FTR painted a rosier picture for the trucking industry for the coming year. Speaking on a conference call Thursday, FTR’s Noel Perry said truckload and rail-carload pricing would stage a slight “comeback” this year. New regulations set to kick in later this year and early in 2017 should also drive up rates by reducing the number of available trucks and drivers, he said.
“We’re still pretty optimistic in 2016,” Mr. Perry said.