Freight Recovery May Be Short-Lived, Land Line Media Warns

Freight markets are showing signs of improvement, but the recovery remains uneven across transportation modes and customer segments. C.H. Robinson expects truckload pricing to rise faster than intermodal rates, a trend that could encourage additional freight to shift to rail-based intermodal service over the next year.

Truckload and intermodal pricing diverge

According to C.H. Robinson, truckload pricing is likely to continue increasing at a faster pace than intermodal pricing. If that trend persists, the cost difference between the two modes would widen, creating an incentive for shippers to move more freight from truckload to intermodal.

The company also indicated that the freight environment could look healthier over the next 12 months if improving demand and tighter capacity continue to develop. Customers remain focused on cost and productivity, but C.H. Robinson executive Granieri said discussions are increasingly including growth, capacity planning and longer-term supply chain strategies.

Recovery varies across freight sectors

Industry executives continue to emphasize that the recovery is not occurring evenly across all segments. Ali Faghri, chief strategy officer for less-than-truckload carrier XPO, said conditions differ by sector and market.

There are also indications of improvement in the LTL and dry van markets. Greg Plemmons, executive vice president and chief operating officer at Old Dominion Freight Line, said the company is seeing “green shoots” across the recovery.

Recent data from freight-matching and transportation technology company Truckstop.com and Bloomberg Intelligence also points to freight markets turning a corner, although brokers and carriers are experiencing the change at different speeds.

Financial pressure remains for some carriers

Despite the improving outlook, financial stress continues to affect portions of the freight industry. Recent bankruptcy filings show that small carriers, logistics companies and distribution businesses are still contending with debt obligations, limited asset bases and restructuring activity.

Kirk Mann, executive vice president and general manager of Transportation and Vendor operations, said the average three-year failure rate for motor carriers with fewer than two years of operating experience and their own Interstate Commerce Commission authority reached 85% during the prolonged freight downturn.

Costs remain a central concern

Freight rates, fuel expenses and broader transportation costs remain major concerns for logistics companies and shippers. Survey results cited in the material show that a majority of respondents expect freight rates to rise, including 70.4% who anticipate higher international rates.

The combination of stronger pricing in truckload, ongoing cost pressure and uneven demand is likely to keep mode selection and network planning at the center of shipper decisions as the freight market continues to recover.