If you’re a shipper or transportation company, this time of year, in the final months leading up to the new year you have to ask yourself, “what’s the outlook for next year?” We don’t have a crystal ball, but here’s how we see it.
Fuel Prices
Prediction: Most predictions are for fuel prices to remain relatively low next year.
• Most economies are slow or slowing.
• There is a glut of supply and the Middle East doesn’t seem to be slowing production.
• More fuel efficient vehicles are actually starting to effect demand for gasoline.
• Natural Gas is a very economical alternative right now due to the new fracking technologies recovering previously unrecoverable resource.
What could affect this prediction?
• A major conflict in the Middle East.
• OPEC deciding to cut production.
Labour Shortage
Prediction: Continued driver shortage
This seems like old news, but every year the shortage of truck drivers seems to increase. We can expect more of this next year.
• Existing truck drivers are retiring at a faster rate than new entrants.
• The market for freight is growing and the demand for drivers is growing.
What could effect this prediction?
• A major recession.
• With the oil boom slowdown, trucking companies may be successful at attracting new drivers from the oil patch labour pool.
• Trucking companies are heavily marketing jobs to women. Women currently make up only a small fraction of truck drivers. Should female truck drivers become a trend, it could really help out the driver shortage problem.
Capacity
Prediction: More available capacity in 2016
Coming into the end of the year spot market capacity is up (according to DAT Trendlines) and spot market loads are down. This is a key indicator that freight volume is soft right now. From a capacity perspective we should see much more available capacity in 2016.
• Q3 2015 freight volumes are soft.
• Trucking companies being proactive about hiring and recruiting.
• Outlook for economy is soft.
What could effect this prediction?
• New rules or regulations that could tighten capacity.
• An economic boom.
Traffic Flow
Prediction: Increased southbound traffic to the US, softer northbound traffic to Canada, less East-West traffic in Canada.
• With the low Canadian Dollar, imports are considerably more expensive. This will drive less import from China and the US.
• With the low Canadian Dollar, Canadian Exports will be more attractive, particularly in the United States. More exports should shift to the US.
What could effect this prediction?
• A World Wide economic boom, or oil price shock, could appreciate the Canadian Dollar and reverse this trend.
What Do You Think?
XTL wants to know what your predictions are for 2016. Drop us a line, or comment on our post and keep the discussion alive.