2010 Logistics Lookout

While the economic recovery will be slow, shippers should keep their eyes open for early signs of rate hike activity in the first half of the year.

Nobody is predicting any dramatic post-recession bounce as the national economy slowly emerges from its fitful and uneasy hibernation. On the freight transportation front, carriers in most sectors are still plagued with overcapacity, hoping that consumers will shake off their credit concerns and begin to register the kind of demands for goods that translate into shipping volume growth.

But most observers agree that while the economy may have bottomed out in mid-2009, it will be running along the bottom for some time—and there will be no “hockey stick upturn” in demand for goods and services. Forecasts are that the second half of 2009 saw a GDP advance of 3 percent, but that will probably settle at closer to 2 percent for the entire year.

And although by all accounts a recognizable rebound will be slow in coming, shippers should nevertheless be on the lookout for the first indications of rate hike activity in the first half of 2010. This will reflect a subtle increase in demand, but nothing substantial enough to tip the rate scale in the carrier’s favor.

“Shipping volume will pick up slowly through this year, but there will not be the big boom that usually occurs at the beginning of an economic recovery,” observes Jim Haughey, director of economics for RBI-US, Logistics Management’s parent company. “Keep in mind that although there is still a credit shortage, it is not apparent because there is little borrowing going on. But as the economy improves, many small carriers and shippers won’t be able to obtain financing readily.”

According to Haughey, shippers should expect small rate increases that will probably happen slowly and could be progressive. “Although this upward pressure on rates will not be excessive,” he says, “the direction of rates has begun to turn. Depending on the transportation mode, this would generally be a good time to lock into prices.” With that subtle warning in mind, here is how the various sectors are shaping up as we move into 2010. ~ John Quinn, Logistics Management