The trucking industry outlook for the remainder of 2021 calls for the inflationary rate environment to persist, as elevated freight volumes continue to contend with stifled truckload capacity, according to an industry outlook from truckload carrier U.S. Xpress Enterprises.
The Chattanooga, Tenn.-based company released its Q3 2021 economic forecast August 5, revealing three key themes the carrier is watching in the second half of the year, including a shortage of truck drivers, economic uncertainty, and higher freight rates. Some highlights from the report include:
Driver scarcity will continue to impact truckload capacity. Additional stimulus checks and unemployment benefits continue to keep drivers off the road. Even as various state governments have rescinded pandemic unemployment benefits, there are still more than nine million workers with continuing pandemic claims.
“With that much labor sitting on the sidelines, we’re unlikely to see any quick relief for the driver shortage,” according to the report. “Carriers have introduced new perks and incentives, yet according to the American Trucking Associations, fleet sizes for large and small carriers remain down. Additionally, many company drivers are electing to run under their own authority, not necessarily increasing capacity, but resulting in reduced utilization and deeper fragmentation of the industry.”
Continuing challenges in the supply chain and uncertainty about consumption trends and economic growth remain. “Throughout the pandemic, we’ve seen how chaos and uncertainty can impact the supply chain,” according to the report. “Disruptions have impacted capacity, which impacts fleet productivity, which in turn exacerbates overall supply chain volatility. Retail inventories are still well below normal for this time of the year, and government research indicates inventory drawdowns in the face of labor and materials shortages. As more restaurants and in-person activities open, consumer spending could shift back to services and experiences, even as the leisure and hospitality sectors struggle to fill jobs.”
RFP (requests for proposal) season will see increased contract rates due to inflationary spot market activity. U.S. Xpress said it expects freight demand to remain strong given the broader economic recovery combined with the continued tailwinds from the Federal Government’s stimulus package, which the company said had a notable impact on operations in the first half of this year. On the supply side, the market for professional drivers remains challenging, which is helping to keep a lid on supply, the company also said. Such conditions are expected to continue to support spot market rates in excess of contract rates and a strengthening contract renewal environment through the remainder of 2021.
“These factors will continue to significantly impact carriers and shippers alike for the months to come, but as vaccination rates increase and the economy continues to re-open, we’re hopeful for a positive impact to the supply chain,” Eric Fuller, president and CEO, U.S. Xpress Enterprises, Inc., said in a statement. “Throughout the pandemic, our true heroes have been the truck drivers, warehouse and retail workers, logistics and supply chain managers, and a host of other front-line workers who have sustained lives.”