US Gulf Report
Special Report
hurricanes as being the thing that shifts the freight market in a substantial manner ,” Miller said .
Immediate impact
The bulk of the pricing pressure will be seen in the immediate post-storm period as relief supplies head south , said David Spencer , vice president of market intelligence at Arrive Logistics , a 3PL in Austin , Texas . But a temporary pricing surge will eventually fade , he said .
“ While , in some cases , these storms may have been enough to disrupt routing guides , current market fundamentals , including a large contract-to-spot rate spread , should not result in much more than a short-lived surge in demand ,” Spencer said .
He said he does not expect year-over-year spot rate increases higher than 5 % in the fourth quarter .
An uptick in pricing may still constrain the overall market by keeping excess capacity on the road . “ The recent spot rate volatility could actually work to help keep carriers on the brink of failure in the market longer due to increased spot opportunities ,” he said .
Spencer expects the increase in dry-van contract rates to reach a peak of 4 % to 6 % in the fourth quarter of 2025 , while spot rates will reach a peak increase of 11 % to 13 % in the third quarter .
Absorbing capacity
Storm recovery efforts will command a significant amount of truck capacity , but there is more truck capacity available in 2024 than there was after the 2017 hurricanes . “ We are still oversupplied to the tune of 100,000 to 120,000 carrier authorities ,” Kendra Tucker , CEO of Truckstop . com , said during the Journal of Commerce Inland Distribution Conference in early October .
New entrants flooded the market from 2020 through 2022 and the number of carriers with active operating authorities has dropped since then , but “ it ’ s still too many , just given the level of volume that we ’ ve got ,” Tucker said .
Kent Williams , executive vice president of sales and marketing at Averitt , a less-than-truckload ( LTL ) and truckload carrier based in Cookeville , Tenn ., is slightly more optimistic .
“ I think the impact of the hurricanes will move the needle on capacity ,” although not by much , he told the Journal of Commerce . “ I don ’ t think we ’ ll go all of a sudden from excess capacity and depressed rates to a market reset . We may move closer to a balance in supply and demand .”
“ Recent spot rate volatility could actually help keep carriers on the brink of failure in the market .”
Capacity can tighten even if trucks aren ’ t taken out of the market , Williams pointed out .
“ We ’ ve had to change routes and transit times because what was once doable under the driver hours of service rules is no longer doable ,” he said .
For example , LTL truck drivers who used to take Interstate 40 between Charlotte , NC , and Nashville , Tenn ., are now rerouting through Atlanta , adding hours and miles to their trip .
“ That hasn ’ t affected our service standards between Charlotte and Nashville , but some routes to points on the perimeter can no longer be serviced the next day ,” Williams said .
email : bill . cassidy @ spglobal . com
Some trucks in the Gulf and Southeast are rerouting to avoid damaged or flooded roads , adding time to transits . Jason Lincoln Lester / Shutterstock . com
26 Journal of Commerce | November 4 , 2024 www . joc . com