Since June, truckload and LTL volumes have exceeded 2019
levels as manufacturing, came back online. This
year-over-year growth in volumes accelerated throughout the third quarter and
looks to remain strong through the end of the year.
The spike in truckload and LTL demand is driven by changes
in consumer buying habits from experiences and services to hard goods that
require shipping. Retail sales, excluding motor vehicles, reached record levels
in August at $428 billion, according to the U.S. Census Bureau.
E-commerce sales increased 45% year-over-year during the
second quarter. The increase in at-home shopping has pressured supply chains
and left many retailers in a struggle to replenish significantly depleted
inventories.
Census Bureau data shows the retail industry’s inventories-to-sales
ratio sits near all-time lows. Many transportation industry analysts have
pointed to the need for continued inventory restocking as a primary reason why demand
for truck transportation will remain high for a prolonged period of time.
Meanwhile, supply is likely to be constrained for some time.
Carriers aren’t yet in a position to replace the capacity that left the market
earlier this year. In addition, an acute shortage of drivers means there is no
one to drive new equipment even if it became available.
Analysts believe the supply deficit is likely to linger and
that driver wage increases in the 15% to 20% range are required to get the
number of drivers needed to meet demand. Analysts also think the current demand
cycle could run longer than the historical average of six to eight quarters. If
they are right, shippers can expect much higher rates over the next two years.