Q&A: Avery Vise, FTR Transportation Intelligence Vice President of Trucking

万博2.0app下载Group News Editor Jeff Berman recently caught up withAvery Vise,FTR Transportation Intelligence Vice President of Trucking. They discussd various themes and trends in the trucking sector, including market conditions, rates and pricing, and the impact of COVID-19 on trucking, among others. A transcript of their conversation follows below.

LM:How do you view the current state of the truckload and less-than-truckload (LTL) markets? What have been the biggest changes since COVID-19 truly kicked in?

Avery Vise:The word volatility does not describe it well enough. Our Trucking Conditions Index showed that trucking conditions in June were the best in a decade, even though two months earlier, trucking conditions were the worst on record. It is just about the most extreme situation you could imagine and even more complicated if you are a dry van or refrigerated carrier, because, for the first few weeks of the COVID-19 pandemic, you had all this extra demand for grocery restocking and then everything collapsed. And starting in mid-to-late May, and especially during June, which is normally a seasonal peak anyway but we were not really sure because of the lockdowns and the quarantines, we saw conditions in June that were the best for the market in a decade, coming out of the Great Recession. It is really a function of how much capacity was lost as truckload and LTL carriers furloughed a lot of drivers and other workers and then how fast the rebound was based on the growth we saw in retail sales in May and June and to a lesser extent in May in the industrial sector. June and July industrial sector activity improved. It has been a dramatic shift in just the last four months, from OK to horrible to really pretty good. That is where we stand now, and the real question is going to be where are we going to go?

LM:How do you view the current state of trucking rates and pricing? What type of impact has COVID-19 had?

Vise:From the carrier perspective, the rate environment was pretty weak heading into the pandemic. Spot rates were well below where they were during the hot 2017-2018 market and had been below the five-year average even since early 2019. It is similar to the overall picture for trucking, in that the very early stages of the pandemic, for the carriers serving the grocery supply chain, had a little bit of support but then everything collapsed in April. By April, we were down 26% annually for spot rates, and that is coming off a market that was really not all that great a year ago. Since then, the recovery from May into July…has been sustained and I think there was only one week in that period when spot markets were down week over week. And we are now not only above last year in pretty much all of the segments and are above the five-year average [in recent weeks] and quite possibly will stay there, only because the comparisons are seasonal. June is the peak in the spot market, both in rates and in volume, so as we look ahead, even if rates were to stabilize and not get any higher, which is possible—and it is possible they would come down a little or not at all—it is certainly not a bad bet that rates will be no worse than stable. If that is the case, they will be ahead of seasonal comparisons for a while. The spot rate market has recovered quite substantially. Just a few months ago, the OOIDA was complaining about brokers not paying market rates to owner-operators and owner-operators wanting legislation to bolster rates. That just seems like ancient history at this point.

LM:What about contract rates?

Vise:合同利率只是不移动迅速,甚至in normal situations, and I would say now that you are less likely to see dramatic moves because of the uncertainty. That sort of “freezes” both parties, because you don’t want to sign longer-term arrangements when you really don’t know what your situation is going to be. While there might be an impulse, to some degree, on the shipper’s part a few months back, to take advantage of it and rebid everything. I think the recovery, to this point, has been stronger than we anticipated in late March and early April. In my opinion…a lot of that has been driven by the degree to which Washington stepped in and said “we are going to take care of this problem economically through very generous unemployment benefits, the Paycheck Protection Program, and economic impact payments that most taxpayers got. There have been trillions of dollars pumped into the economy and without that I don’t think we would have seen what we have had. We would not only have the volume support, but I don’t think we would have the rate support either that we have seen so far. It is clear that with 29 million people receiving unemployment benefits that if we cut those benefits off…it is not an economically smart thing to do. We are watching that very closely.

LM:There has been a fair amount of talk about U.S.-based companies relying less on China, in the form of “near shoring.” Should that come to fruition, what would that mean for inbound freight flows as it relates to trucking transit times or length of haul?

Vise:我不确定这是一个巨大的差异。我的biggest question is the whole “if it actually happens” thing. First of all, we have already kind of seen what happens when we move things away from China. We saw that last year. If China per se is the issue, well, we have Vietnam, Taiwan, Thailand, and others. And if the issue is just the political turmoil in China, then I don’t know if it necessarily changes anything. If the issue is getting more control over the ability to change supply chain and to react to the market quicker, one of the issues we have is that the lead times are in months and not in days or weeks, when you are depending on Asia, or even Europe. That has been an issue for decades, and it never seems to offset labor costs. Near shoring is one of those things that everybody always brings up, like a vehicle mile tax, for example, that I skeptical will happen. We have a distribution system that is based, in a large degree, for consumer goods on product coming into Southern California being brought by rail inland and then via drayage to places like Chicago and other places like that. And we have built that distribution system situation, because that is how we get our goods from Asia. If the goods are going to be produced locally, them we are not going to produce them in Southern California, as California is not a business-friendly state to begin with, and other than producing it for the California market—for the rest of the country—why would you move the product inland? If you accept the premise of near shoring, it might reduce the total length of shipment, and the total shipment distance would probably come down. The truck distance, however, likely would go up, because instead of seeing more product mover via intermodal, we will see more product moved directly by truck and modestly [increase] length of haul. We are not talking about trucks running rail haul length or anything like that, at least not until we get to an autonomous truck environment, and I don’t see that happening this decade. It is interesting because you would presume that the inventory situation would become even tighter, because you don’t have to worry about the fluff, even if you have a quicker turnaround. The concept of just-in-time inventory has sort of stalled, for economic reasons, I think, and also because of the desire to make sure you have product. When you have events like a pandemic that becomes more and more critical, because you had no ability to get product for several months. In February and March, we had a situation where trade was disrupted because of COVID-19 and yet we were not having consumption disrupted. It is an interesting sort of counter-factual debate as to what would have happened had that environment continued. If China were no longer an option that would have led to a very interesting scenario in which we would have had near shoring to some degree on an emergency basis just to keep consumers supplied with things they needed. It is something that never happened and now may never will.

LM:What are your thoughts on the 2020 Peak Season outlook?

Vise:From a supply standpoint, we went past the point of no return, in terms of having a [traditional] Peak Season that we would typically have. That is not to say we can’t have a really good one, but we may be too late. A lot of that depends on international trade since so many consumer goods are imported. If you look at the June numbers, imports and exports were very strong, but it was all because of automobiles. There was not any tremendous growth on the consumer side. We are going be challenged from a supply standpoint, but I think the bigger picture is that because people have been at home and not going to a physical office, I am not sure they are thinking about 2020 like a normal year anyway. Yes, there will be some desire to celebrate the holidays, but I think a lot of people have sort of “rewarded” themselves and their kids with little things over time, and those stimulus checks people have received will be spent well before Black Friday and Cyber Monday. I feel like we will end up with the same amount of volume that we would in a typical Peak Season, but that peak will be spread out, from May through December…but I don’t think it will be a traditional Peak Season.