First-Quarter Trucking Outlook
Special Report
DAT forecasts dry-van spot rates will fall to about $ 1.55 per mile before fuel surcharges in Q1 . Shutterstock . com
“ We work with [ trucking ] clients on a daily basis helping them with bids , and it ’ s been very busy compared with last year ,” Henry said . “ Some of these large Fortune 500 companies are putting out large RFPs [ requests for proposals ] and they ’ re getting pretty significant positive response on those .”
Other consultants involved in shipper-carrier negotiations support Henry ’ s observation . Price isn ’ t the only thing on shippers ’ minds , said Michael Regan , chief relationship officer at TranzAct Technologies , a software provider and shipper consultant . “ I ’ ve had shippers stress guaranteed capacity ,” he said .
Lower rates , more stability
“ We ’ re seeing less of those three-month or six-month mini-bids ,” Chris Henry , COO of KSM Transport Advisors , said Jan . 16 during a DAT Freight & Analytics weekly market update . Instead , the consulting firm is seeing more oneyear and even two-year bids from shippers , Henry said .
“ There are positive indicators of where freight is going overall ,” he said . “ A lot of our carriers lost lanes in 2022 and
2023 and now they ’ re starting to see lanes come back .” That ’ s a sign US and Canadian shippers are seeking more certainty about capacity even with low truckload spot rates .
Shippers and truckers are looking to move more freight under contract , he said . That ’ s a sign that shippers are thinking less about short-term opportunities to save money on the transactional spot market and more about whether they ’ ll have access to trucks if demand picks up in 2024 .
Truckload pricing declines for 12th straight month in December
US long-haul truckload producer price index ( PPI )
230 227
220
210 140 200
190
180
170 Jan L 2022 May , 2022J Jul
Jan 2023 Jul
Jan 2024
TL PPI
Notes : Producer price indices based on selling prices for trucking services
Source : US Bureau of Labor Statistics data , JOC analysis
“ We ’ re seeing less of those threemonth or six-month mini-bids .”
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If truckload carriers can keep contract rates in this year ’ s bids flat , they ’ ll consider it a victory . Truckload pricing plunged last year , falling 24.7 % from its peak in May 2022 through August , according to the US Bureau of Labor Statistics ( BLS ) long-distance truckload producer price index ( PPI ), which includes spot and contract pricing .
The truckload PPI rose 3 % from August to October , but in December dropped for the second straight month , falling 3.6 % to its lowest point of 2023 , slightly below its readings for June through August . What ’ s more , the index was lower year over year in every month of 2023 .
Average shipper-paid spot truckload rates rose slightly in December , climbing 3 cents per mile to $ 2.26 per mile , according to a Journal of Commerce analysis of allinclusive rates paid by shippers .
The Cass Freight Truckload Linehaul Index for December , released Jan . 15 , rose 0.4 %, only its second increase in the past 18 months . However , the increase kept the index in line with August and 1 % below the level seen last May . That ’ s a sign the truckload market is stabilizing , Cass said in its report .
If so , the truckload sector is just finding its footing as it rolls into the first quarter , its weakest quarter of the year . DAT is anticipating a seasonal decline in dry-van spot rates through the middle of February , forecasting those rates will bottom at about $ 1.55 per mile before fuel surcharges in the first quarter .
“ That ’ s 25 cents a mile lower than last year ,” Dean Croke , principal analyst at DAT , said during the weekly update . A stronger-than-usual seasonal downturn could cull more truckload capacity , especially as insurance payments come due . “ We are losing capacity in the long-haul sector slowly ,” Croke said .
But that capacity loss is still a slow drip rather than a full-fledged exodus .
“ It ’ s very easy to enter trucking , but it ’ s hard to exit ,” Henry said . There ’ s a high cost associated with disposing of equipment , especially newer equipment purchased at a higher price than it would get today as a used truck .
The wild card is the weather . Waves of winter storms across North America hampered transportation in January , freezing many loads in place as far south as Texas and reviving memories of blizzards that boosted spot truckload rates in February 2021 .
email : bill . cassidy @ spglobal . com
28 Journal of Commerce | February 12 , 2024 www . joc . com