Consumer demand is strong in almost all product categories for all trailer types. The final quarter has the early signs of being the strongest 4th quarter on record. Rates will stay the same this quarter in flatbed whereas they normally see a decline this time of year. Refrigerated and dry van rates typically see a spike but this year they have already been on the high side due to surging demand for all trailer types. For this reason, we suspect that these two trailer types will not see a spike and will stay where they have been.
We are asked daily if we are seeing delays at the ports and if we are seeing backlogs, especially in California. Like many other businesses, the ports are dealing with surging demands and an employee shortage. As a nation, we have seen COVID peaks and valleys this year while consumer demand remains very high. When I have lunch or dinner at a restaurant, I notice almost all of them have a help wanted sign in the window. Many of our customers whose peak season was over the summer could not find seasonal help. Inflation is in the news and labor wages climb to attract new employees.
Our prediction is that consumer demand will stay at current levels or higher until at least the first quarter of 2023. Meaning, so will over the road freight rates. There are fewer drivers and trucks on the road in comparison to outbound freight. The likelihood that truck capacity will grow to meet this demand (more trucks added to existing fleets) is very slim since most companies know the existing demand could burst at any time. When that happens, then trucking companies can be in the red quickly.
The good news is that the economy is booming and there seems to be no end in sight. COVID comes and goes in terms of its impact on daily life but as a whole people seem to be finding a sense of normality again. A pilot friend of mine says that his commercial airline is now surging with travel. This time last year they were turning away new pilots and taking early retirement from senior captains. Now they are short of pilots and hiring and training rapidly. A year can make a lot of difference in retrospect. I look forward to what this new year brings us all. Don’t forget, Bill Gates once said, “Most people overestimate what they can do in a week and underestimate what they can do in a year.” It’s the marathon that we run and not the sprint.
Merry Christmas to everyone and Happy New Year from all of us here at Samson Logistics.