lower truck capacity & higher rates forecasted for 2020

Analysts at Morgan Stanley predict decreased truck capacity in 2020, translating to higher truckload rates. The five reasons they believe decreased truck capacity will occur include: 

1.) Carriers have to convert to the electronic logging device (ELD) by tomorrow, December 17. The ELD rule takes full effect and the AORBD exemption ends. 

2.) Carrier insurance premiums have been on the rise due to catastrophic accidents. Carriers have seen over a 50% increase in premiums. 

3.) Drivers' failed alcohol or drug tests that initially went unreported will be required to be entered into a federal database on January 6, 2020. 

4.) On January 1st, the International Maritime Organization (IMO) regulation begins. This regulation seeks to put a 0.5% restriction on sulphur emissions in 2020. Currently, the mandate is 3.5% and the maritime industry will move toward fuels composed of less sulphur-- i.e. diesel. Diesel prices are expected to rise by up to 30%, which will highly impact small truckload carriers. 

5.) On January 1st, the California AB 5 rule goes into effect. This rule will affect carriers who  do business in California and will require indepent contract carriers to operate as company employees. Some carriers are looking to reduce operations in California. 

For these reasons, rates are expected to increase in 2020--potentially back up to 2018 levels. 

More information on this matter is available here.