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Freight Demand and the Impact on 3PLs

Freight demand is rebounding in a big way. After months of diminished freight volume, the resurgence of freight demand is a welcome sign. 

As supply chains continue to repair and stabilize, freight demand is rebounding in a big way. After months of diminished freight volume began in April 2020, the resurgence of freight demand signals good signs for the U.S. economy. 

Increasing Freight Demand

Flatbed truck hauling cargo over the road

In a June 2020 article published on Commercial Carrier Journal Digital, author James Jaillet details the recent surge in freight demand, offering projections and sharing a few potential land mines that lay ahead. Jaillet writes, 

“In recent weeks, freight demand has sprang back to life and started to build momentum, shaking off the shockwaves of the COVID-19 outbreak in the U.S. and state lockdown orders that smothered the economy. Load volume on the spot market has soared, and rates are expected to jump upward in June after falling to the floor in April.

Whether that momentum can be sustained, however, remains the key question presently. Major holes in the economy remain, but pent-up consumer demand and a seasonal jolt of freight have stirred optimism.”

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As a 3PL provider specializing in moving specialized freight, we are also optimistic at the uptick in demand. All areas of industry were impacted by COVID-19, and in many ways, 3PLs have been on a front line of their own working to ensure America’s supply chain keeps moving. 

Responding to Climbing Rates 

Pent-up consumer demand also is expected to release over the upcoming holidays. 

“Memorial Day weekend was a major ‘kickstarter’ of the recent freight bounce, said Jim Nicholson, vice president of digital brokerage Loadsmart. With the growth in freight volume, rates have been trending back upward too, he said. ‘Shippers will see challenges in procuring spot market capacity without paying higher spot rates,’ he said, at least through the traditionally robust Memorial Day to July 4 freight season.”

--Source

At Ascent Specialized, we continue to work with our clients to help smooth any sharp increases in pricing as capacity levels are more elastic than in the past. 

Meeting Seasonal Fluctuations

Seasonal fluctuations are now harder to predict as the pandemic opens and closes regions of the country. Speaking again of Jim Nicholson, the author writes,

“He anticipates the gains to continue through year’s end, predicting that ‘carriers will be rewarded with a stronger than usual retail season’ during the holiday season. Consumer demand is the major question as to whether the current wave of momentum can last, said Nicholson. ‘That will be the story of the second half of the year,” he said, whether demand will continue or not.’”

--Source

As the market saw with Memorial Day and July 4th, we anticipate the coming holidays will similarly impact freight demand. 

Now, as all areas of industry adapt to COVID-19-related changes, 3PLs are on the front lines ensuring freight. Much remains to be seen for how demand and the market as a whole will react. Still, what may at one time be a favorable lane for trucks may be less than desirable within a week or two.

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