Trucking Industry Update by Noël Perry – July 2018

Noël Perry,’s Chief Economist, is the lead economist and thought leader on freight and transportation topics and the owner of Transport Futures. Perry monitors the trucking market and provides detailed analyses using data. Below you will find his most recent analysis of the capacity data and future of the trucking market.


Another week of soft data — what does it mean?

We now have two weeks of softening data in early July. This data tells us one thing and suggests another. It tells us that the four strong weeks in late June were not likely the beginning of an additional surge in market tightness, on top of what the market has already endured. Unless the numbers dramatically reverse this week, at best, we’re back in the uneasy equilibrium of a market teetering on the edge of real capacity problems.

Reports from the field indicate that the recent spike was from shippers and carriers pushing to get work done before July 4.

That is the normal peak of the shipping season — a peak frequently followed by vacations. As such, the dramatically lower numbers from the last two weeks may be an offset to the peak, making a bump likely in the next several weeks.

Is this the beginning or a new trend?

Our research suggests that the last two weeks may indicate a turning point in this capacity event. First off, freight softens seasonally in July, as sees in the recovery average line in the above chart.

More importantly, the regulatory environment has quieted down after the shock of the electronic logging device (ELD) introduction.

In fact, the relatively permissive regulatory policies of the Trump Administration should be increasing productivity. Fleets have already beefed up recruiting efforts to cover such growth and seem to be slowly whittling down the driver shortages. Finally, this capacity crisis is about at the age (one year) when previous crises (in 2004 and 2014) made their turns back toward normalcy. Apparently, it takes that long for the adjustments to begin to bear fruit.

That said, two weeks of data is not enough to firmly establish a new trend. It’s simply a strong sign that something new may be happening and signals us to start making plans to make adjustments should the coming weeks show the same pattern.

Be careful how you calculate things!

Even if conditions remain very tight into 2019, this last chart shows an important fact about this event and expectations for the next year.

The chart displays current rates, going back a year and forecast out a year, holding the underlying trend of that forecast flat.

The movement of the red line going forward reflects seasonal shifts. The blue line presents rate levels from a year before, allowing us to see why YOY growth calculations vary. (YOY calculations are presented by the columns.)

You immediately see that the big acceleration of growth during this event occurred in 2017 when rates were rising, but the year before comparison points were flat.

Security analysts call that phenomenon “soft comps.” That trend peaked in early 2018. Since then, although rates have been increasingly sequential, the 2017 comparisons were increasing at about the same rate, so the YOY numbers have stayed high, but flat. However, if the forecast is for rates stabilizing at the current level (as this chart assumes), then the YOY numbers will begin to fall as the year-before rate levels get closer and closer to current rates.

That is what happens when one has “strong comp” (previous-year data that is rising). That pattern has tended to understate the emotional effects of the rate increases so far in 2018. Rates are up almost 50 cents a mile with no change in YOY growth rates. If rates stabilize going forward, those strong comps will tend to cause strong emotional effects in the opposite direction. Rates will be very high in absolute terms but may even show negative YOY growth during those weeks that had particularly strong growth a year earlier. For instance, late June next year may present that risk.

Let’s manage our emotions.

We bring these dynamics to your attention because the stress in this market is very high, making it vulnerable to strong swings in emotions. The current frenzy of new tractor orders is a great example. This problem is especially strong at times of market turns —times we may be entering now. The solution to such problems is acquiring solid data and analysis that provides an objective picture of what is really happening, not dependent on the “fake news” swirling around the industry.

The revolutionary expansion of spot market data and its companion analysis provided by should be an indispensable part of your suite of managerial tools in times like these.