This has been a year of extremes for carrier capacity and pricing. To start the year, we saw some slow but steady rate increases. Once COVID hit we saw an immediate spike in rates followed by an extreme dip in rates just weeks later. After the initial scare and uncertainty of COVID-19, stores needed to restock and freight rates started to climb again and we’ve seen a steady increase since then to our current peak levels. Pricing seems to have steadied or at least slowed in growth, but now that local produce is winding down or finished in most parts of the country, will this start to free up capacity and what will we see in the first half of 2021 for pricing and availability?
Planning for 2021 is proving more complicated than ever. For most of this year, we’ve seen estimates on what rates would do and almost everyone has missed the mark. And the ones that called for increases didn’t foresee the kind of spike we’ve experienced or how long they would last. From here, do we employ the wisdom of Wall Street, institutional studies, computerized pricing models, or is it time to toss out the conventional theory and go with a gut feeling? The reasons I’ve heard for the fluctuations in pricing range from supply and demand imbalance, stimulus money keeping drivers from working, a recent surge in imports, local produce, fear of COVID for drivers, drivers leaving the market when rates dropped, and many more.
How much truth is there for these reasonings and how do we use that data to make an educated guess on future rates? Many customers we’ve seen send out Request for Proposal (RFP’s) have either had to scrap the RFP in total, delay the start date, or found the rates they received back from carriers were invalid by the time they implemented the new rates. We’re in the middle of a fluctuation that we’ve never experienced since deregulation.
Most seem to think that other than the upcoming holidays, we’ve reached a peak in pricing. Flat seems to be the overall consensus for 2021. But with a little less than two months to go in the year, we’ll most likely still see some volatility leaving people nervous for what we’ll see in January, not to mention what snowstorms might do to the market. Either way, we should have an interesting 2021.
