A Recap of Our Most Recent Webinar with FMI’s, Paul Poziumschi
In an era of market unpredictability, staying ahead of the curve is the name of the game for shippers. Transfix's recent webinar, titled "2H and Beyond: Macro & Micro Insights to Keep Shippers Ahead of Market Volatility," included crucial findings and predictions that are set to influence the trucking industry in the coming months from Paul Poziumschi, senior director of Freight Market Intelligence at Transfix.
Here are some highlights from the discussion:
- Understanding the Landscape: One key insight from the webinar is that while market volatility is on the rise, it's not quite reaching the "normal" levels of 2019. However, shippers should brace for some unexpected challenges, particularly in the Midwest. The fourth quarter of this year is expected to usher in a soft market, impacting everything from rates to tender rejections.
- Spot Market Surge: Shippers should also be prepared for a significant shift toward the spot market. Despite discussions of net new carrier revocation numbers, the current capacity levels are keeping market volatility at bay. Since August, we've witnessed an influx of carriers entering the market, aligning with the usual seasonality patterns observed in the second half of the year, including produce and holiday seasons
- Consumer Behavior Signals: An intriguing insight shared during the webinar was the correlation between consumer behavior in October and the upcoming retail season. With the reinstatement of student loan debt repayment in October and record-high revolving debt levels, the percentage of average personal income allocated to debt repayment has doubled compared to 2021. This is a significant indicator to watch as it could greatly influence retail dynamics.
- Fed Pessimism and Inflation: Delving into the possibility of a recession, Paul presented a 'Fed pessimist' perspective. If inflation were to decrease, the Federal Reserve might not feel compelled to cut rates, potentially averting a recession. While core inflation was higher than expected, major fluctuations are not anticipated. Fuel prices, however, are a different story, remaining at an all-time high and predicted to hold steady through 2023.
- The Year of the Union: Lastly, 2023 is being dubbed the "Year of the Union." The ongoing United Automotive Workers union strike and its effects on the supply chain are closely monitored. Another key indicator for the first half of the year is the renewal of farming wage contracts in 2024. This could have profound implications for the macroeconomy, a topic to watch closely in the first quarter.
Post-discussion, Paul took a few questions from the audience:
Q: Will the economy only rebound when the Fed starts to lower the rate?
A: Paul noted that inflation is likely here to stay–specifically, high inflation. The overall sentiment is the Fed cannot cut rates when they possibly should in order to support the economy. If you accept this premise, only then will the economy will shift and we enter some form of deflation or recession which will trigger the Fed cutting rates. It’s always hard to predict when we’ll enter a recession, how long it will be, and what kind of recession it could be as the concept is nonlinear. Therefore, jumpstarting the economy may be a little “too late”. But some sort of slowdown could be in the cards.
Q: Do you have any perspective on how the recent decline in Truck Transportation Employment coming off the Yellow bankruptcy will be sorted out?
A: June showed pressure in trucking employment with the industry losing 2,800 truck drivers. This sparked discussion around a supply adjustment to balance the market. In July, the industry gained 3,200 truck drivers which represents a good amount of seasonal drivers taking advantage of produce season and peak retail season. However, if you adjust for seasonality, we are still losing drivers. You could say capacity is the strongest it’s ever been reflective of COVID times but there has been a significant decline when you take a 30,000-foot view. Paul believes we are due for a “supply shock” that could happen in the next quarter as we’re still oversupplied “by any metric” for the level of demand we are currently in.
Q: Can you provide an indication of where you expect 2024 contractual dry van loads to land in terms of a YOY% change?
A: Paul provided a 6-month forecast that noted the further you go from 3, 6, or 9 months - the less confidence you have that the trends will continue into the future. In short, the Transfix 6-month rate forecast is $2.31/all-in at a national level and linehaul rate settles between a range of $1.65-$1.89/per mile with about $.64 added for fuel. You could argue there are a lot of pressures on the downside of the industry so by the middle of 2024, we could see a 5% increase in rates. We are starting to see some foundations establish themselves that indicate these increases. Over the next 6-12 months, we could see a return to ‘neutral’ and levels will likely reflect those of what we saw in 2019.
As the freight market continues to evolve, shippers armed with these insights will be better equipped to navigate the ever-changing landscape, ensuring they stay ahead of market volatility. We'll see you soon with another webinar, but until then you can watch the full recording here.
Disclaimer: All views and opinions expressed in this webinar are those of the speakers and do not necessarily reflect the views or positions of Transfix, Inc. or any parent companies or affiliates or the companies with which the participants are affiliated, and may have been previously disseminated by them. The views and opinions expressed in this webinar are based upon information considered reliable, but neither Transfix, Inc. nor its affiliates, nor the companies with which such participants are affiliated, warrant its completeness or accuracy, and it should not be relied upon as such. All such views and opinions are subject to change.
