As the residential housing construction sector remains in a holding pattern, the flatbed trucking industry is feeling the impact. With fewer housing starts and a decrease in demand for construction materials, freight volumes and rates have also experienced a decline. For carriers and shippers operating within the flatbed market, it’s important to understand the current state of residential housing construction and how it may continue to affect the industry.
Residential Housing Construction Slowdown
According to the U.S. Census Bureau, residential housing construction experienced a 9.3% downturn in February 2020, marking the biggest decline since April 2010. The decrease was mainly attributed to a drop in the construction of single-family homes, which saw an 8.2% decrease. This significant decline is likely due to a combination of factors, including the high cost of materials, a shortage of labor, and the uncertainties surrounding the current economic climate.
Furthermore, the current COVID-19 pandemic has contributed to the slowdown in demand for new residential construction. Stay-at-home orders and social distancing measures have led to disruptions in the supply chain and a decrease in consumer confidence, resulting in a decrease in home sales. With less demand for new homes, the need for construction materials and transportation has also decreased.
Impact on Flatbed Freight
As residential housing construction slows down, the demand for flatbed trucks has also decreased. Flatbed trucks are commonly used to transport construction materials such as lumber, steel, and concrete to and from construction sites. With fewer construction projects in progress, there is a decrease in the need for these types of shipments.
The decrease in demand has also led to a decrease in flatbed freight rates. The DAT Freight Index, which reports on the state of transportation demand and rates, showed a 15% decrease in flatbed rates in March 2020 compared to the same period in 2019. This decline can be attributed to both the decrease in demand and an increase in capacity, as many carriers have been transitioning from other segments, such as dry van or refrigerated freight, to flatbed in search of more profitable loads.
Strategies for Flatbed Carriers and Shippers
In the face of a slowdown in residential housing construction, it’s important for flatbed carriers and shippers to be proactive in their strategies. For carriers, it may mean diversifying their load portfolio beyond construction materials to other markets, such as energy and infrastructure. This can help to mitigate the risk of being solely reliant on the residential construction sector.
On the other hand, shippers can also take steps to reduce their transportation costs during this slowdown. Negotiating rates and being open to alternative modes of transportation, such as intermodal, can help to lower shipping costs. Additionally, collaborating with freight brokers who have a strong network of carriers and expertise in the flatbed market can ensure timely and cost-effective shipments.
Looking Towards the Future
While the current state of residential housing construction is causing a slowdown in the flatbed industry, there is still potential for a rebound in the future. The construction of new homes and renovations are often seen as indicators of a strong economy, and as the economy recovers, the demand for residential construction is expected to increase.
Furthermore, with the recent passing of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, there may be opportunities for the construction industry to receive financial support and stimulate growth. This could lead to an increase in the demand for flatbed transportation as construction projects resume.
In the meantime, it is important for flatbed carriers and shippers to remain flexible and adapt to the changing market conditions. By diversifying and collaborating, both carriers and shippers can position themselves for success in the flatbed market, both now and in the future.
At Whitewater Freight, we understand the challenges that come with the current state of the flatbed market. As a third party logistics company handling freight in all of the US and Canada, we have the expertise and resources to assist carriers and shippers alike. Contact us today to learn more about our services and how we can help your business navigate through this holding pattern in the residential housing construction industry.
