4 Stocks To Watch As Trucking Sector Continues To Rebound

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The U.S. trucking industry looks set to make a complete rebound in 2021, as it continues to recover from the worst of the pandemic seen last year. Notably, FTR Transportation Intelligence stated that in 2021, truck loadings are estimated to increase about 5% following an estimated contraction of about 4% in 2020, as quoted in a Heavy Duty Trucking article. Such a scenario is sure to be beneficial for trucking companies as well as truck manufacturers.

Moreover, the FTR’s Vice President of trucking, Avery Vise said in the report that increasing spot rates were largely responsible for the mildly higher rates in 2020 but contract rates are expected to lead in 2021, witnessing a gain of around 10% across all segments.

The article also mentioned that in the third quarter, consumers spent a major share of the government financial support on goods rather than services as the pandemic led to a halt in services such as travel and outside entertainment. The higher spending on goods benefited trucking.

In fact, the recovery seems to be continuing as the American Trucking Associations (“ATA”) reported that its Truck Tonnage Index rose 7.4% in December 2020, following a revised increase of 3.2% in November. Notably, ATA’s Chief Economist, Bob Costello stated that this was the index’s highest monthly gain since June 2020. Strong consumption, restocking of retail inventory, and robust single-family home construction aided freight in registering the robust gains, he said.

Meanwhile, spot truckload freight volume also increased in December. Per DAT Freight & Analytics, the DAT Truckload Volume Index — which measures dry van, refrigerated, and flatbed loads moved by truckload carriers — increased 2.5% in December on a month-over-month basis and 17% year over year.

Notably, the distribution of the COVID-19 vaccine among the majority of the U.S. population will be instrumental in ensuring that the rebound in the trucking sector continues. In fact, as mentioned in a Transport Topics article, Costello said that the vaccine will help in returning to the old normal. This means that sectors like services and manufacturing, which have been affected by the pandemic, can rebound and in turn lead to more freight.

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