Every year, the U.S. economy — which is closely linked to the U.S. trucking industry — experiences seasonal spikes in the summer and winter. Factoring in the drastic impact the coronavirus has had on the U.S. economy, not to mention other economies around the globe, summer will likely look entirely different this year.
Demand rates hit record highs in 2018 and 2019, and the summer and winter months were substantial contributing seasons. These rates indicate how prosperous the trucking industry was during those times, and also signify a new equilibrium of previously excess supply that negatively impacted the freight market in early 2018.
This summer, the economy and the coronavirus are two trending topics for our industry. However, they aren’t the only pieces to keep an eye on to understand and predict how the trucking industry will fare from now to September.
Deciphering the U.S. economy amid a pandemic
Just one month ago, Federal Reserve Chair Jeremy Powell was optimistic that the U.S. economy would begin entering a state of recovery, albeit a slow one, this summer. Powell credited the healthy state of our economy before the emergence of the pandemic to his optimistic reasoning, stating that we would see a solid bounce-back once the virus was fully contained.
Director of Georgia University’s Economic Forecasting Center Rajeev Dhawan recently emphasized that the U.S. was spared a more significant recession than initially anticipated due to trillions of dollars in federal spending that have been helping keep credit markets liquid. During this pandemic, rising economic numbers are closely correlated with a substantial rise in cases in densely populated states, including California and Texas. Epidemiologists and economists warn that these rising COVID-19 case numbers could likely indicate a second wave of infections — a potentially devastating weight added to an economy currently hanging on by a thread.
For our industry, the fragile state of the economy is well reflected in current refrigerated container rates. Recent analytical research predicts that the seasonal rate spike in mid-July will be much lower than in previous years, as restaurants and the foodservice industry face significant customer and reopening challenges.
Truckers are in for a hotter than hot summer
Fleet managers can help drivers take on hot temperatures ahead of time. Ensuring all trucks are equipped with proper air conditioning is just one way. Providing drivers with summer-friendly supplies, like portable fans and reusable water bottles, is another.
All eyes will be on the highway transportation bill
On June 18, the House Transportation and Infrastructure Committee advanced a nearly $500 billion highway bill. The measure was moved to the floor of the chamber, and House leaders intend to debate the bill these coming weeks.
The measure was designed by transportation leaders to improve freight and transportation programs and redevelop the country’s highway infrastructure. The bill also factors in climate change concerns and current infrastructure policies. If approved, the House bill would provide billions in funding to the Federal Highway Administration, Federal Transit Administration, National Highway Traffic Safety Administration, and the Federal Motor Carrier Safety Administration.
Road trips will be this summer’s hottest mode of vacation transport
The American Automobile Association (AAA) projects there will be approximately 683 million road trips from July to September of this year. While other industries, like the airline and railway industries, are seeing rampant declines in travel plans this summer, road travel is still expected to mimic the numbers close to the 2019 season. Road-trip popularity can be attributed to the pandemic and the cost-effective and distancing-friendly benefits that road trips offer.
Given the massive influx of road travel this summer, fleet businesses should prepare for more congested roadways than they’ve been accustomed to these past several months.
Hot weather and pandemic conundrums aren’t the only factors to set our sights on this summer. Check out our 2019 blog post on how hurricane season, which comes from June to November every year, impacts freight.