Trucking Industry Trends to Watch in 2020

As 2020 begins, shippers and carriers will keep a close eye on market conditions to gauge this year’s trucking outlook.

The Red Kite team regularly watches industry trends to ensure our customers get fair, competitive rates based on current market conditions. Here are a few trends our team will closely watch that could shape trucking in 2020.

Manufacturing Activity

2019’s Manufacturing Activity

In 2019, manufacturing activity softened amid trade tensions, slowing business confidence and economic uncertainty. We saw the IHS Markit US Manufacturing PMI drop to 52.4 in December of 2019 from 54.9 in January of 2019. In the second half of 2019, we watched manufacturing PMI begin to edge upwards as business expectations for 2020 improved, primarily due to favorable financial conditions and easing trade tensions.

 

2020 Manufacturing Outlook

According to a report published by the Institute for Supply Management (ISM), we can expect manufacturing activity to increase in 2020. Purchasing and supply executives in the manufacturing sector predict that revenue will be higher this year and are optimistic that manufacturing activity will be stronger in the first half of 2020 than it was in the last half of 2019. Executives also believe overall business prospects will increase this year.

The manufacturing sector is important for us to watch because trucks regularly ship loads used in a variety of manufacturing applications; the level of manufacturing activity can have a major impact on overall freight volume and demand.

Trade Tensions & Tariffs

We watched trade tensions between China and the U.S. escalate last year as new tariffs went into effect. At the end of 2019, President Trump announced that Phase 1 of a trade deal with China will be signed on Jan. 15. President Trump also stated he will travel to Beijing later this year to continue talks, indicating that we could be closer to seeing a final U.S.-China trade deal.

Tariffs and trade policies often influence manufacturing activity – trade tensions can put a pause on business investments and new orders. Because the manufacturing sector is so closely tied to truck volume, our team keeps a close eye on any policies and indicators that impact manufacturing activity.

Hours of Service (HOS) Rule Changes

In 2019, the Federal Motor Carrier Safety Administration (FMSCA) proposed a rule to modify five existing HOS rules. According to the FMSCA, we will see the rule changes allow drivers more flexibility in managing unexpected road conditions, such as traffic congestion, while maintaining current safety limits on driving time. The changes will also give drivers the ability to split their off-duty time and allow for more flexible breaks.

Proposed HOS Changes

Modifications What Would Change
30-Minute Break Rule Break requirement would be tied to 8 hours of driving time without an interruption of at least 30 minutes. Break can be taken by a driver using on-duty, but not driving, status.
Adverse Driving Conditions Exception Maximum window for permitted driving would be extended by 2 hours.
Off-Duty Break Off-duty break of at least 30 minutes, but no more than 3 hours, that pauses a truck driver’s 14-hour driving window would be allowed. Break would be allowed if a driver takes 10 consecutive off-duty hours at the end of their shift.
Short-Haul Exception Lengthen driver’s maximum on-duty period from 12 to 14 hours. Extend operating distance limit from 100 air miles to 150 air miles.
Sleeper-Berth Exception Drivers could split required 10 hours off-duty into either an 8 and 2 split or a 7 and 3 split, either in sleeper-berth of off-duty. Hours would not count against 14-hour driving window.

The FMSCA plans on enacting the rule modifications quickly, but experts believe we will not see the changes go into effect until later this year.

Trucking Indexes

FTR Shippers Conditions Index (SCI)

The SCI is one of the trucking condition indexes the Red Kite team closely follows. SCI provides insight into market conditions for shippers and measures favorability based on freight demand, freight rates, fleet capacity and fuel price.

Shippers conditions were favorable throughout last year, largely due to lower freight rates and demand. FTR’s projection shows we can expect shipper conditions to remain positive during the first half of this year, but conditions will slightly decrease due to firming carrier capacity utilization.

FTR Trucking Conditions Index (TCI)

Another index we closely follow is the TCI, which measures market favorability for carriers based on  freight volumes, freight rates, fleet capacity, fuel price and financing.

Trucking conditions were mostly unfavorable in 2019 as a softening manufacturing sector contributed to lower freight volume and demand. According to FTR’s projection, we will see a neutral TCI reading during the first half of this year.

Navigating the 2020 Market

Manufacturing activity, trade news and trucking regulations and indexes are just a few trends the Red Kite team will watch in 2020. It can be challenging to predict trucking conditions and outlooks, but following market and economic indicators helps give us an idea of how freight demand and rates could be impacted. By monitoring these key indicators, we hope to provide valuable insights to our customers and help them find the best transportation solution for their unique shipping needs.

Contact Red Kite or request a quote to see how our experienced team can help you navigate the 2020 shipping market.