Freight Market Indicators in January 2021
January 2021 - Transportation Market Report
We definitively believe that the conditions that we are currently operating in are going to last for at least the first half of 2021. And we also think there is a strong probability that would extend through Q3 of 2021.
Leading Indicator: Purchasing Managers Index
One of the main reasons why we believe these conditions will continue is the PMI, purchasing managers index. The PMI and other factors, like the new order index and backlog order index, are all high right now which indicates an expansionary economy. The executive actions were taken by the new administration to buy American also have us believing that domestic production is going to rise. While this is a good thing for the country, we do not expect volumes to loosen up significantly anytime soon. Industrial production is a leading indicator as what is being produced now will not necessarily be reflected in the freight market right away. We expect industrial production to continue to ramp up and with that more volume eventually entering the transportation market.
Trailing Indicator: Fuel Prices
The national average price of diesel continues to rise however the cost is still significantly lower than it was a year ago. We expect fuel to continue to rise due to a couple of factors, one of which is the opening of the country. As more people have vaccinated there may be an increase in consumer travel and creating a demand. We do not expect the price of diesel to raise north of $3 a gallon.
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