As Heraclitus once said, “The only constant in life is change.” That certainly rings true for transportation professionals looking to manage ambiguous freight markets. Truckload pricing continues to change, making it difficult for shippers to understand when they are paying fair market cost to ship goods.
Load Volumes Declining
Truckload.com reported a 9% decrease in total load postings week-over-week, the largest drop so far this year. Volume is down 29% year-over-year, but about 69% above the five-year average for the week. Load availability was slightly higher on the West Coast, but down in all other regions.
Spot Rates Declining
Many sectors continue to experience improved balance, which is evident in declining truckload prices. For example, dry van rates are down $0.50+ per mile year-over-year, and refer has fallen $0.90+ from December 2021. And because industrial orders fell, flatbed rates also fell slightly compared to January, but are still up 10% from this same period in 2021. One thing to note is this is the 1st decrease year-over-year since June 2020.
Unfortunately, the decrease in flatbed rates will be short-lived as we head into summer, which will bring along disruptions due to US infrastructure initiatives, and road construction. Plus, as the US supply chain continues to clean up port congestion, there will be an influx of new industrial orders.
Contract Rate Increasing
Weakening spot market rates, along with skyrocketing fuel costs in March, overshadowed record-high prices for loads moving under contract. Contracted rates, on average, for dry van increased $0.19 to $3.28 per mile, eclipsing a previous record high set in February. On average, contracted reefer jumped $0.20 to $3.45 per mile, while contracted flatbed jumped $0.24 to $3.69 per mile.
Freight Market Supply & Demand
Many factors impact driver supply and demand. A few of the many examples include lower industrial outputs due to summer-month maintenance shutdowns and vacations, shipping backups due to summer holidays, unknown snowball impacts when Shanghai opens, and consumer spending habits that reduce retail consumption.
Static vs. Automatic Procedures
With so many variables and unknowns, most transportation departments don’t have the tools or data needed to pivot– and pivot quickly! To effectively manage freight market fluctuation, and avoid future unknowns, shippers must rethink how they procure freight. They need to shift processes from static to dynamic. Shippers must embrace AI-driven automation tools which will help uncover resilience, sustainability, and cost reduction opportunities for their company, and in turn their end customers. Those who refuse to, or are late to, pivot away from a static freight procurement process may be left behind.