Recent analysis by Stifel Capital Markets concludes that the spot freight market “is red hot” and is now “finally providing some much needed levitation” for contract freight rate pricing front – with a 5% to 10% jump in contract pricing forecasted by the firm over the next three quarters.
Hurricanes Harvey and Irma are also being viewed as “the catalyst the freight market needed” to transition from “modestly positive to strongly positive” in terms of freight demand, Stifel said, as the Federal Emergency Management Agency (FEMA) and others injected incremental demand into an already tightening marketplace to rush emergency supplies into storm-stricken areas.
“Add in the normal retail seasonal peak, the e-commerce surge at the end of the year, and the implementation of the ELD [electronic logging device] mandate on December 18, and we have a recipe for a prolonged period of elevated demand, strong spot rates, and sizable mid- to high-single digit contract price hikes,” Stifel noted in its research brief.
“With spot business enjoying healthy margins, overall margins will begin to improve,” the firm added. “Better contract pricing is already materializing, and that phenomenon should further contribute to margin expansion.”