The new year has begun with an unprecedented first quarter. Flatbed (open deck) season has traditionally been a season that peaks in summer and slows down into the winter months. In 2020, we saw flatbed rates and demand rise from August through December with each month being stronger than the month before. This trend also occurred with dry van and reefer rates, which historically do rise during this period but rose much higher than prior years. I receive questions on these rate changes almost daily and the easy answer is always the same, “supply and demand.” COVID-19 has impacted us in ways that were unforeseen, and it seems now the unexpected will continue into 2021.
I have seen demand increase personally in my town for homes, real estate, outdoor recreation – you name it. Our local UTV dealers do not have any side-by-sides in inventory. I can say the same for the RV dealership that I pass daily on my way to work. Their lot is empty. The auto dealership lot looks like a ghost town. I have friends building homes, buying land, and getting into new hobbies. With record sales numbers and strong demand across the board, the inevitable will be higher prices.
I do not know what this first quarter will look like, but I do know that current demand is strong for almost all raw material categories and finished products. My recommendation is if you are purchasing for retail resell, absolutely go ahead and order now. The current prices may look low in three to four months not just on the freight prices but on the product itself as well. Also, with demand this strong, there is no better time than to roll the new shipping price increases into the new retail pricing. It could end up being the ones making the sell will be the ones with the inventory.
I predict lumber prices will stay strong into the summer season since this is when most home starts peak. The lumber market relies heavily on open deck trailers so this will be another contributor to the increased demand for those trailer types. For those concerned about freight rates and pricing on forward projects, I have a couple of suggestions. First, it would be a good idea to quote higher pricing to your customers than you would have last year to allow yourself some buffer. As this year marches on most, everyone will come to realize that the new increase on product pricing will at least be here for the short term. Meeting customer expectations on delivery and availability is by far more important than meeting the expectation of providing the same rates as last year. Lastly, know that prices and rates will go back down again eventually but unfortunately, so will demand. My best advice would be to focus on the forest instead of the trees and take advantage of the selling opportunities before us. If me or my team can be of service to you, please let us know.