Freight Industry: Trucking Market Outlook post ELD Mandate
The one thing on everybody’s mind as we round out the first quarter of 2019 are freight rates. The ELD mandate bubble had an unusual effect on 2018, driving rates higher than ever before. With the industry correcting, and rates adjusting to normal levels, it is important to understand where the industry is headed. Learn how you can make the most of it.
Although rates are lower than Q1 2018, it is important to remember the industry has settled at an average of $0.25 per mile higher than Q1 2017 rates. When comparing average linehauls, Q1 2018 saw an increase of almost 21% over the same period in 2017, but when looking to Q1 2019 we are still up 11% over 2017. Due to the high rates, the industry saw an influx of new entrants in 2018 trying to take advantage of the inflated rates. Due to demand, used truck prices have increased significantly, with 3-year-old equipment prices hovering around 25% higher than 2017. New entrants should slow because of the inflated equipment prices and depressed freight rates, driving capacity down, and hopefully, rates up.
Market forecasters are reporting a relatively stagnant 2019 with freight rates staying within a few points of current levels. The question now is, how you can stay profitable in the current environment and build a foundation post ELD mandate that will last until the next 2018?
Negotiating rates is vital to running a company. Rome was not built in a day, and neither are favorable rates. Relationships are so important. The more people you know, the more lanes you have available to you. Use your options to leverage brokers against each other. The industry is about to change, and your negotiating tactics will need to adapt, with new technologies entering the industry.
The freight industry is catching up with the rest of the world. With electronic logs in just about every truck on the road, you are going to begin seeing location-based load suggestions, automatically generated routes, and higher profits for those that leverage that information correctly. A few companies are already taking advantage of the data available through electronic logs, and it is only a matter of time before the rest of the industry catches up. OTR Capital has already taken a step in that direction by integrating with KeepTruckin’s marketplace compiles information from their ELD’s and uses it to suggest loads based on your location. Correctly positioning your business for this tech revolution is vital. Check out Overdrive’s latest article on how KeepTruckin is using its ELD data to push companies like yours forward.
Understanding the Market
Understanding the factors affecting the current market will help you run a more profitable and successful business. With all signs pointing towards a stagnant market, it’s time to make connections, grow relationships, and adapt. So when the next upturn finally arrives, your company is positioned to squeeze out every bit of opportunity that comes with it.
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