Despite the extreme volatility of markets worldwide this week, the Wall Street Journal reported that the United States Gross Domestic Product (GDP) has expanded faster than was anticipated in Q2 of this year. The value of all goods produced domestically increased by 3.7 % annually – much higher than the 2.3% announcement earlier this summer by the Commerce Department. Earlier this month, the American Trucking Association said the strengthening U.S. economy brought its shipping index to the second-highest level on record, by 2.8%.
With this increase in U.S. domestic goods comes a higher demand for trucks on the road, at least for now. Strong freight demand should allow motor carriers to raise rates later this year. However, freight volumes may also be negatively affected by high inventory levels over the next few months. Still, any downturn due to high inventory is not expected to last for very long as some of the nation’s biggest retailers are reporting strong sales as we approach end-of-summer and into the holiday season.
Not only are carriers able to raise rates, but shippers are willing to pay more in contract rates to lock in trucking capacity. As spot market rates are falling, the increased contract rates are an indication that shippers expect the now-plentiful truckload capacity to tighten up in the coming months.