A Review Of The Freight Shipping Industry So Far In 2016

Posted in Insights, Shipping on Jul 25, 2016, tagged with freight shipping, trends

We have passed the halfway point of 2016 and we have seen some changes in regard to freight transportation and consumer spending. While we have to take into account that market conditions ebb and flow based on the season and customer buying trends, there is consistent data showing some interesting trends that need to be monitored in the coming months, from the significant increase in the amount of freight shipped to the decline of growth in the trucking industry. 

Freight Shipping Starting to Warm Up This Summer

Something to take note of regarding the economic market is that there have been employment and wage increases across the country, although things can change from one month to the next and make it feel like a ball bobbing up and down in the water. The May 2016 Personal Income and Outlays report provided by the U.S. Department of Commerce’s Bureau of Economic Analysis shows that personal income edged up 0.5 percent in April (wages and salaries increased by $40.4 billion) and had a 0.2 percent increase in May (with wages and salaries up by another $14.7 billion). This economic development has influenced the following:

  • Tonnage increases
    The present economic landscape has led to more consumer spending and manufacturing growth. This is good news for most freight shipping industries that saw an increase in freight cargo, as reflected by a gain of 0.2 percent (121.8) for the monthly Transportation Services Index (TSI) in May 2016, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics. This was the second consecutive monthly increase. The bad news is that trucking and air freight still experienced a decline, which was predicted as the industry is facing a growing recession in global markets such as China that may continue into 2017.
  • Trucking rate increases
    Prices were predicted to increase and stabilize during 2016, and this forecast has been on target so far. This rate increase may be attributed to the economy and consumer spending. Although there was a decline in rates in July, they are still higher today than at the beginning of the year — and may remain so for the short term if diesel fuel prices remain low for the rest of the 2016. In 2017, fuel costs are expected to rise, and this again may affect trucking rate increases. Revenue is still predicted to see major year-over-year increases to a total of $1.52 trillion in 2026.
  • Low fuel costs
    There has been a high expectation that fuel prices would slowly start to rise for FTL and LTL freight shipping. Yet diesel costs still remain low at $2.36 per gallon for 2016, according to the U.S. Energy Information Administration. This is a 31-cent drop from 2015 diesel retail prices. Low fuel costs are predicted to remain steady for the rest of the year and then begin to rise in 2017 to reach an estimated mark of $2.71/gallon — which was commonplace in 2015.
  • Capacity
    It was predicted that freight transportation would reach capacity and turn to increasing rates during 2016. It is safe to assume that this prediction has passed based on the national trucking rate increase. Trucking companies are in the ideal position to forge more agreements with shippers and iron out contracts that will benefit both parties the rest of the year.

It is a great time for the freight shipping industry, as predictions call for conditions to remain steady or improve to the end of 2017. Here at Transit Systems, Inc., we are gearing up to assist customers so they can find the ideal transportation services for LTL freight shipping.