{"id":2609,"date":"2021-01-29T18:34:56","date_gmt":"2021-01-29T18:34:56","guid":{"rendered":"https:\/\/quicktransportsolutions.com\/blog\/?p=2609"},"modified":"2021-01-29T18:34:57","modified_gmt":"2021-01-29T18:34:57","slug":"what-is-the-trucking-industrys-2021-outlook","status":"publish","type":"post","link":"https:\/\/quicktransportsolutions.com\/blog\/what-is-the-trucking-industrys-2021-outlook\/","title":{"rendered":"What is the Trucking Industry\u2019s 2021 Outlook?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">We are now one month into the New Year. As the old saying goes \u2013 time flies. And these days it seems to fly ever faster. Before we know it, we will be talking about 2022! But let\u2019s not get ahead of ourselves. We still need to get through 2021 and the outlook is somewhat murky. Yet there is reason for hope.<\/p>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\"> <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">2020 certainly was a remarkable year in many ways. And it\nwasn\u2019t just because of the COVID-19 pandemic. The trade war with China was\nalready in full swing before the pandemic and a raucous election put stress on\nthe supply chain. Just before COVID hit in full force, trucking activity was\nalready trending downward in January of 2020. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But the year was anything from an ordinary recession. By the\nsecond quarter business inventories had rose at a record pace, mainly due to\nmanufacturers reopening their previously closed plants. By the final quarter of\nthe year, we began to see broader trucking activity once again begin to rise.\nAnd with consumer spending on the rise and a rebound in residential\nconstruction, could we be on the other side of it?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The Picture is Unclear<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">While we all hope for a much better 2021, the picture is\nstill unclear. The timeline surrounding a full recovery will be largely\ndependent on how quickly the COVID-19 pandemic can be brought under control.\nWith a new administration in place and vaccines being rolled out, many hope for\na quick resolution, but medical experts recommend caution. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Even more, other countries are already experiencing vaccine\nbottlenecks that could threaten an effective herd immunity strategy. Already,\ndomestic, and international supply chain disruptions are causing fissures in\nthe market. With supply chain issues on the rise and acting as a strain on\nimports, many expect continued weakened expert activity in 2021. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A major source of the transportation bottlenecks can be\ntraced back to the ports. The main problem lies in getting both the containers\nand ships to the right place. There has been a lot of documented delays at some\nof the nation\u2019s largest ports of call, and issues on either side of the supply\nchain do nothing to help relieve import\/export constraints. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">All this is compounded by a pressing revenue shortfall faced\nby state governments and municipalities across the country. Without adequate\nfunding, local governments are not able to invest in roads, bridges and other\nimprovements to public buildings and public infrastructure. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Trucking and Transportation Volatility<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Against this backdrop, trucking transportation prices are\nbeginning to rise again. Trucking activity across all segments is beginning to\nrise. And while this activity is not matching the level we saw in 2018, when\nthe economy was really roaring, it is a marked improvement over the abysmal\nreadings during the height of the pandemic. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The effect of this on trucking freight and rates will vary\nover 2021 as consumer spending shifts away from retail goods and back towards\nservices. The fact is 2020 was a wild ride for both Gross Domestic Product\n(GDP) and freight transport. GDP as it relates to freight transport suffered a\ncontraction in the first two quarters of 2020 but rebounded in the third and\nfourth quarters as the economy picked back up and emerged from lockdowns. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Transportation research company <a href=\"https:\/\/www.ftrintel.com\/\">FTR<\/a> expects growth to be moderate in 2021,\nwhich is not a bad thing considering moderate growth is better than no growth\nat all. Their specific forecast calls for GDP growth of 4% in the first\nquarter, then by the fourth quarter of 2021 they expect that to drop to 2.6%. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, even if we see some slowing in the freight economy, there\nis still strength in the broader economy, whether it be in retail trade,\nconstruction, manufacturing, or otherwise. A lot of this has been driven by an\nincrease in demand for goods transported by truck combined with a continuing\ntruck driver shortage driven by the pandemic and the new federal drug-testing\nclearinghouse. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>A Closer Look at Port and Trucking Data<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Trucking analysts see active truck utilization recovering a\nbit since the height of the pandemic, but it was a big hole to crawl out of.\nThe share of all Class 8 trucks hauling freight at any given moment dropped\nfrom 90% in 2019 to as low as 82% from March through October of 2020. And while\nwe are back to close to 96%, in 2017 and 2018 the industry was at near-100%\nutilization across all segments. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In 2021, rates have already started to pick up. With high\ndemand and low utilization both on the horizon and projected to get worse as we\nmove further into the year, contract rates could wind up a full 10% higher than\nwhere they were at the same point last year. Spot rates are on the rise and\nmany analysts are having a hard time seeing where they level out. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">One of the other big unknowns is the balance between goods and services. The boon for trucking during the pandemic has been the boom in goods deliveries, even as the service economy was almost wiped out. Still, not every fleet segment has come through unscathed. Those involved in food service or hauling equipment for events have been hit especially hard. <\/p>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\">   <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">All of this is driven by the problems we mentioned earlier\nat the ports. While there has been an improvement in intermodal traffic since\nmid-year, the big story of the day are international imports, which have seen a\nhuge surge in the first month of the year, which itself is driven by the retail\nsector. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With inventories at extremely low levels, retailers are\npumping money out to restock, especially as the economy is expected to pick up\nin the second half of 2021. This record level of import activity is\ncontributing to a rise in nearly all transportation segments. And this is at a\ntime when ports on the nation\u2019s West Coast appear to be losing ground to their\nEast and Gulf Coast counterparts. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Still, don\u2019t expect West Coast ports to just fade into the sunset.\nWhile there has been severe congestion at ports in Southern California, the\nfirst month of 2021 as seen a sharp rebound in West Coast port activity. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The United States in 2021<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The biggest blank spot in the trucking and transportation\ncrystal ball remains the COVID-19 pandemic. With the U.S. nearing 400,000\ndeaths, cases and infections seem to be trending in the right direction. Still,\nit is anyone\u2019s guess as to when the country and even the entire world will get\nback to anything even close to resembling \u201cnormal.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Many expect cases will peak out sometime in mid-February,\nespecially as the vaccine proliferates. It will be several weeks before anyone\nhas a good idea of when we will be able to see the light at the end of the\ntunnel. Fortunately, even with a new administration in Washington D.C., no one\nis expecting any widespread shutdowns or lockdowns. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Even with no lockdowns, headwinds remain. For the first time\nsince April 2020, the U.S. Bureau of Labor Statistics reported a decline in the\noverall number of payroll jobs. While the vast majority of them were in leisure\nand hospitality, there are knock-on effects to a cratering job market within\nthe once-thriving service sector. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In addition to declining payroll jobs, unemployment also\nrose. Growth will slow, which itself will have an impact on the trucking\nsector, should the unemployment situation not improve rather quickly. And there\nare still unknowns regarding government spending. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>A New Political Calculus<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Biden administration has come out in support of more\nstimulus, but there is still a question mark on whether they will actually be\nable to get more money injected into the economy. With the Senate evenly\ndivided and the filibuster still in effect, the Biden administration will need\nthe help of moderates on both sides of the aisle to get anything passed. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In addition to providing additional unemployment benefits and stimulus checks directly to Americans, the Biden administration plans to push a major infrastructure overhaul. Questions of how it would be funded remain, but major players in the trucking and transportation sectors have come out in support of a fuel tax to fund infrastructure improvements. <\/p>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\">   <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The question is whether there is a political appetite for\nbig deal making in the current political environment. Both sides are still far\napart on minor matters, so getting them to the table on major ones will\ncontinue to be an open question.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>We are now one month into the New Year. As the old saying goes \u2013 time flies. And these days it seems to fly ever faster. Before we know it, we will be talking about 2022! But let\u2019s not get ahead of ourselves. We still need to get through 2021 and the outlook is somewhat &#8230; <a title=\"What is the Trucking Industry\u2019s 2021 Outlook?\" class=\"read-more\" href=\"https:\/\/quicktransportsolutions.com\/blog\/what-is-the-trucking-industrys-2021-outlook\/\" aria-label=\"Read more about What is the Trucking Industry\u2019s 2021 Outlook?\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":2095,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2609","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-trucking"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is the Trucking Industry\u2019s 2021 Outlook? - Quick Transport Solutions Trucking Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/quicktransportsolutions.com\/blog\/what-is-the-trucking-industrys-2021-outlook\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is the Trucking Industry\u2019s 2021 Outlook? - Quick Transport Solutions Trucking Blog\" \/>\n<meta property=\"og:description\" content=\"We are now one month into the New Year. 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As the old saying goes \u2013 time flies. And these days it seems to fly ever faster. Before we know it, we will be talking about 2022! But let\u2019s not get ahead of ourselves. We still need to get through 2021 and the outlook is somewhat ... 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