Bit by bit, trucking carriers are finding their way home out of a disastrous April during which volumes and rates fell precipitously and empty miles increased. Volumes have returned and asset utilization has begun to normalize. Revenue per driver per week has started ticking back up but hasn’t yet established a clear positive trend.We’re encouraged by a recovery in used truck prices, particularly 3-year-old models, but we note this may be driven by a lack of supply (less turnover from large fleets) than increasing demand. The fact that prices for 4- and 5-year-old trucks have not moved up with the newer models indicates to us that smaller fleets and owner-operators are struggling to navigate what has been a confusing and choppy trucking market.There are still major challenges for truckload carriers. Fuel surcharges are not as beneficial now that the spread between retail and rack diesel prices has narrowed significantly, and insurance costs remain too high.Most importantly, it appears that carriers have not yet been able to gain pricing power on contracted freight. Shippers have been resistant to higher rates, though perhaps not as aggressively as before. We believe that several months of continued spot market outperformance may be necessary to change shipper perception of the balance of supply and demand in the trucking market.
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