Heavy Duty Trucking, January 2021

JANUARY 2021 HDT 9 WWW TRUCKINGINFO COM tion demand said Jonathan Starks FTRs chief intelligence officer and I can come up with a really easy scenario in which that starts to come off pretty quickly as soon as we move into 2021 Another important stimulant for freight demand has been the inventory situation in retail The sharp increase in goods spending came as manufacturing and imports were constrained for an extended period The result was a drop in retail inventories just as retail sales were rising sharply The push to replenish historically lean retail inventories has added to the base freight demand that resulted from higher consumer spending on goods Retail inventories are still about 7 below the level in February but what this means for 2021 is unclear The fact that inventories are still low implies that a weakening of sales alone would not end the push to replenish inventories said Vise However another interpretation of the failure of inventories to rebound is that some level of inventory might be lost permanently said Clay Slaughter FTRs chief strategy officer Ssome sectors may have been overdue for an inventory adjustment at a very foundational level he said For instance dealers might have been wondering for some time whether they really need a parking lot full of cars and the current situation has given them the opportunity to act Department stores and other brick and mortar outlets that were under stress from the growing move toward e commerce were folding or reducing locations before the pandemic Fewer but bigger players in the retail market might not need the same level of total inventory as a larger number of smaller players CMYCMMYCYCMYKAutoDeck October 2020 pdf 1 9 1 20 9 19 AM Despite the risks to freight volumes in 2021 the pandemics effects on capacity probably will keep trucking companies financially healthy with solid rates Vise said November was a very strong month for hiring in trucking but we are skeptical that this pace can continue he said In addition to the usual constraints on driver supply the pandemic has meant fewer new drivers and more retirements and career changes The Drug and Alcohol Clearinghouse also appears to be at least as big of a factor in culling drivers as most people anticipated Vise said Another dynamic to watch in 2021 is what impact if any the unprecedented surge in newly authorized carriers since June will have on the freight markets Vise said The effect on overall capacity is unclear he explained because we do not know to what extent these new carriers are adding to capacity or just shifting from capacity leased to carriers to capacity operating under its own authority Consumers still are not spending quite as much money as they were in February but spending on goods is up nearly 8