Over the course of the COVID-19 pandemic, a common theme throughout our analyses and forecasts of economic data has been the heightening of dynamics that were already in play. Carrier exits in 2019 foreshadowed an inflationary rate environment in 2020. But the pandemic economy intensified those underlying factors. Consequently, freight rates surged to record levels in the fall. In many respects, 2020’s “peak season” comprised most of Q3 and Q4.
Driver shortages, capacity crunches, and ample freight (driven by evolutions in buying habits) were the common themes of 2020. By and large, 2021 looks to offer more of the same. The chief determinant, of course, is the trajectory of the pandemic.
Our 2021 Economic Forecast looks at a slew of economic indicators such as GDP, unemployment, Class 8 truck orders and the Logistics’ Managers Index to discuss four key factors that will drive freight markets over the coming year: inventory restocking, the available supply of drivers, ramped up government spending, and the overall health of the country’s economy (and its people, as well).
2021 will be a story of contending tailwinds and headwinds. An array of economic factors – from new housing starts to industrial output, inventory stocking and consumer demand – will determine how freight markets behave amidst the ongoing pandemic. The key question in most observers’ minds will be: “How long will the current freight peak linger?” We expect the inflationary rate environment to persist for most of 2021 before a brief easing in freight volumes late 3rd quarter.
Each new year is an opportunity to take stock of the past year while looking forward in anticipation to the future. That’s particularly true of 2021 – this will be a year that matters immensely. Every decision you make, big or small, will have repercussions. So, take a look!