Uber Freight
Heading into the holiday season, truckload demand and capacity appear to be normalizing, nearshoring activity to Mexico is rapidly escalating, and LTL tailwinds have arrived, as outlined in Uber Freight’s Q4 Market Update and Outlook Report.
“Shippers and carriers looking to close out the year with a bang will need to hone in on optimizing their supply chain strategies. Working with a trusted logistics partner can help them secure low rates ahead of continued market volatility, take advantage of the nearshoring boom and incentives that come along with it, and tap into logistics technology to navigate continued LTL volatility,” according to Uber Freight.
Key takeaways:
- After hitting the bottom in April, truckload demand has slowly but surely increased over the course of the year. In Q3, it rose by 1.2% and was flat year-over-year. Demand has turned positive for the first time in 9 months with the truckload market likely beyond the bottom.
- Normalized capacity also seems to be within view as new entrants recede and existing carriers manage their headcount. Anticipate low rates and rising operating costs will put more pressure on carriers, accelerating the rate of supply correction.
- Truckload employment showcased a +13,400 increase in September, likely as a result of Yellow’s drivers flooding the trucking market. Although trucking employment is flattening out, large fleets may not continue to absorb excess capacity from failing carriers and owner-operators in the coming months. Expect long-distance truckload employment to drop 3-5% year-over-year based on lower carrier revenues and profit margins.
- The Mexican government published a new decree in October granting incentives to companies planning to relocate operations to the country. This decree has the potential to attract an additional $18.5 billion in investments in 2024, a sign that nearshoring to Mexico should be top-of-mind for shippers. The main sectors that will benefit from these new policies are automotive, aerospace, agroindustry, pharmaceutical, and electronics.
- Expect 3-6% contractual increase heading into 2024.
