CSCMP's Supply Chain Quarterly
January 24, 2020
Forward Thinking

Truckload rates to rise, 3PL says

Shippers and carriers should expect rising rates for the peak holiday retail season, according to Coyote Logistics' Q3 forecast.

Shippers and carriers can expect to see higher truckload rates heading into the peak holiday season, third-party logistics provider Coyote Logistics said in its third-quarter forecast, released this month.

The Chicago-based company said its "Coyote Curve" forecasting model projects a return to inflationary year-over-year spot truckload market conditions seen in 2017 and 2018, when rates reached historic highs. The firm said spot market rates have been falling, pointing to a nearly 25% drop in its second-quarter Spot Market Index, but that "supply-and-demand indicators demonstrate that the market is at an inflection point where demand is starting to increase again and, in turn, will drive rising spot market rates heading into the busy Q4 months." 

"The 2017 and 2018 market caused a lot of pain for many truckload shippers as rates jumped to historic highs. We believe 2020 has the potential to create very similar challenges for shippers," Coyote Logistics' Chief Strategy Officer Chris Pickett said in a statement. "This year, we've seen a complete 180 from the market, leading to difficult times for many carriers who may have overshot their truck orders and plans based on the previous year's more favorable economic conditions."

The firm said current conditions will help temper the effect of anticipated increases on overall spot market rates.

"While guidance suggests that spot truckload rates are likely to begin rising, the Coyote Curve does not expect the 2019 peak holiday season to be as impactful on overall spot market rates and service levels as usual, due to the current deflationary market," the firm said. "However, surge capacity challenges often exacerbate other supply chain complexities. Those challenges will still cause retailers to look for creative capacity solutions—such as power only, leased trailers, and mobile storage—to help manage their volume spikes."

Coyote Logistics\' says its Coyote Curve measures three concurrent cycles—seasonal demand, annual procurement, and more elusive market capacity—to help supply chain professionals identify recurring patterns that can lead to better informed supply chain and logistics decisions.

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