The expectation for truckload (TL) contractual rates to increase by double digits in 2021 is growing. In a Wednesday note to clients, UBS (NYSE: UBS) transportation equities analyst Tom Wadewitz outlined the fundamentals supporting this projection.
“The current extreme tightness in the TL spot market plus a constructive outlook on freight point to double-digit rate increases in 2021,” he concluded.
Wadewitz said recent spot market metrics “show a market that remains on a trend of further tightening.” He noted all-time highs in the number of loads in the spot market and a lack of available truck capacity to haul those loads as catalysts for his thesis. He expects “demand to remain strong through peak season and into 2021 as inventory replenishment likely remains a tailwind.”