U.S. Xpress says the 2021 economic outlook, which was released Wednesday, has seen many of the same fundamentals that were in place during the second half of 2020. They will take in place around through at least the third quarter.
U.S. Xpress Sees Trends in the Freight Market
Moving in a manner consistent with our expectations are freight markets (and overall economy). Common themes of 2020 were drivers shortages, capacity crunches and ample freight (driven by evolutions in buying habits). 2021 looks to offer more of the same by and large.
U.S. Xpress: Inventory Levels are at All-Time Lows
Survey data for the Chattanooga, Tennessee-based truckload carrier’s proprietary shipper showed that inventory levels are at all-time lows for the dataset’s 15-year history. In fact, the report pointed to earnings reports from retailers. They showed sales going up at twice the pace of inventory additions. The recent upward revision to the National Retail Federation’s container imports has forecasting inventory restocking which could take another five to six months.
Class 8 Truck Orders Jump up
Approximately 50,000 units in November and December, the report said it can be seen remaining if the most current jump in Class 8 truck orders is in fact for fleet replacement or growth. Driver shortages will persist for the foreseeable future is the expectation of the former. As well as the structural barriers to driver employment will more than likely keep capacity in check for the time being.
The report said hiring won’t be occurring a fast quick enough to change the tight TL capacity dynamic. This is according to a recent ruling easing CDL instruction and testing rules. This includes low driver’s school enrollment. In addition, prohibitive insurance costs (and the potential for increased coverage minimums). There was an estimating 200,000 fewer CDLs issued in 2020. There are approximately 50,000 drivers with Drug & Alcohol Clearinghouse issues. However, only 12% that have completed return-to-duty protocol. Those remain the obstacles to capacity additions.
Shippers can Attract Good Drivers
Thriving in this environment are shippers that will have access to carriers with top operating models. They are those that can attract and retain top drivers. In fact, the same can be said for shippers who are able to work with the brokerage operations. They can bundle capacity to fill the gaps in coverage, the report said.