2020 was a landmark year for the U.S. and the rest of the world, leaving no industry untouched by the COVID-19 pandemic. The trucking industry was no exception, as the sector experienced major changes due to the impact of the pandemic and its resulting economic shutdowns. Now, as we look forward to seeing how 2021 unfolds, experts weigh in on what to expect for the trucking market this year.
Recovery by late 2021
Industry experts are predicting a market rebound by Q3 of 2021, with an even sunnier 2022 on the horizon. According to FTR Transportation Intelligence, truck loadings are expected to increase by over 5% in 2021, with over 6% growth for the flatbed segment. This is in stark contrast to the 4% decline for truck loadings in 2020. However, while recovery is ahead of us, analysts warn that the first half of 2021 will still have some challenges.
Said Avery Vise, vice president of trucking at FTR, “If you look at the data from the spot market [. . . ] you might assume that we’ve already fully recovered. But the spot market is only about a third of the total truck freight market.”
According to Don Ake, vice president of commercial vehicles, “The thing to remember is that we do not expect the current conditions to continue throughout 2021, because these are pandemic and pandemic-recovery issues that we see in the market. They are not normal. At some point, hopefully, these things will be resolved and we return to a more regular pattern where the fleets can get the equipment that they need.”
Ake noted that while 2021 may not be an entirely smooth year for the industry, it will lead to more positive growth in the following year: “The good news is that 2022 is expected to be a very good year—close to a great year — anyway, with demand continuing to go up. So if we pull forward some of that, then we would kind of look at a balancing of 2021 and 2022. The issue is the second half of 2021, coming out of this pandemic with everything kind of in chaos and trying to re-establish some balance.”
The driver shortage is expected to continue for the coming months, at least until the COVID-19 vaccine becomes more widely available. Due to social distancing measures imposed by the pandemic, 2021 saw a substantial decline in new CDL drivers as training and state-level testing became limited. As such, there will continue to be a limited pool of drivers available for the industry, even as freight increases later in the year, therefore putting more pressure on market players and tightening capacity.
As a result of the difficult market, many trucking companies are currently operating at an unusually low price point. However, as 2021 sees more positive growth, market players are expected to increase their prices, potentially rising to pre-pandemic levels. Contract rates are expected to increase between 8 and 15% this year, with spot rates also trending upward throughout the year until easing in the fall months, and increasing again the holiday season. The shortage of drivers and reduced capacity are both factors pushing prices upward.
Due to the harsh conditions recently imposed on the market, many trucking industries are facing bankruptcy, while many have already gone under. As a result, 2021 is likely to see more and more mergers between several market players in order to continue operating. By merging, companies can pool their resources together and are more likely to be able to withstand unfavorable market conditions, allowing them to avoid going under and possibly even expand during this challenging time.