As the demands for food and medical supplies skyrocket, spot rates are rising by as much as whole points. As truckers rush to keep shelves stocked all across the United States, the industry is making a bounce back from where it was last year. The big question is, will this last?
Stimulus in Disguise
COVID-19 has impacted everyone’s lives. While no one wants to attribute anything good to the pandemic, there is a silver lining for the trucking industry. Last year’s slump game shippers more control over spot rates compared to previous years. This led to layoffs and some trucking companies closing shop. With the resurgence of demand to keep supply chains running, spot rates are increasing and trucking companies are getting more leverage in setting rates for spot deliveries. In fact, spot rates are moving toward 2018 levels.
Hotbeds for Spot Rates
Spot rates are highest where COVID-19 is hitting the hardest. California, the Pacific Northwest, Florida, and Louisiana experienced spot rates increasing by over six percent last month, or more than 10 cents. As the response to the outbreak continues, rates could jump to 20 cents and beyond in the hardest-hit states in the country. While there may be a contraction in non-essential sectors such as toys, clothing, and certain consumer electronics, other sectors are experiencing growth. Manufacturing, medical supplies, groceries, and others are in high demand at all levels, and spot rates to keep stores and distributors stocked are climbing.
Looking to a Post-Virus Economy
Despite the unstable-but-rising nature of spot rates right now, the trucking industry needs to make plans for how they will handle supply chains once the current situation has passed. While many are projecting a slow recovery, many within the freight industry see a different outlook. Many shippers and carriers alike are predicting a huge demand for capacity – perhaps higher than what the industry will face in the current climate with demands for essential and medical products. Even now, trucking companies are increasing their efforts to hire additional drivers to meet the current demand, and owner-operators are filling in gaps because spot rates are too good to pass up.
Express Freight Finance will continue to monitor the COVID-19 pandemic and its impact on the trucking industry.