U.S. Xpress Releases 2021 Economic Forecast
CHATTANOOGA, Tenn.: U.S. Xpress Enterprises, Inc. (NYSE: USX) has released its 2021 economic forecast, highlighting a variety of trends and updates specific to the trucking industry. The full, detailed forecast can be found on the company blog. Four key insights include:
- Fewer drivers and more stimulus funding will continue to reduce truckload capacity – Reduced CDL training and the Drug & Alcohol Clearinghouse has resulted in nearly 200,000 fewer drivers as we enter 2021. Additional government stimulus dollars could keep even more from starting a driving career or coming back to the trucking industry. This will likely result in decreased capacity and driver pay increases.
- Freight activity remains hot, but economic growth cools – While Wall Street is bullish on a 2021 economic recovery, the ongoing pandemic and slow vaccination efforts will temper growth for the first half of the year. Inventory replenishment will remain a strong focus for shippers for months to come. Additionally, record-breaking holiday shopping will result in increased returns during early Q1, and more households will continue using online platforms for key purchases as physical retail remains shuttered. As coronavirus cases slow, we anticipate a steady recovery into the second half of the year.
- Ramped up government spending – Now that Democrats control the Presidency and both chambers of Congress, 2021 will usher in an entirely new slate of policy prescriptions that could have wide repercussions for the trucking industry. Additional unemployment assistance and stimulus dollars will stimulate consumption (and bolster freight volumes) while sidelining drivers from returning to the labor market. A proposed increase in mandatory insurance minimums for carriers could drive many smaller players out of business. Additionally, the new administration is planning a bold infrastructure program which will spur a slew of construction projects across the country that could induce drivers to leave the labor market for jobs closer to home. These factors could have long term ramifications impacting demand in to 2022 and beyond.
- Contract and spot rates to increase – The combination of fewer drivers, increased freight demand and reduced capacity will result in contract rates to increase between 8 to 15% during 2021. Spot rates will likely trend upward until the fall months, when they’ll ease prior to increasing again as we enter the holiday peak season.
“The coronavirus pandemic continues to impact our industry in ways we couldn’t have imagined a year ago, and those challenges will reverberate throughout 2021,” said Eric Fuller, President & CEO of U.S. Xpress. “I’m proud of our men and women who have been on the front lines, delivering essential goods throughout this pandemic. This will continue to be a challenging year, but I’m confident it will end on a positive note.”
