As the Q2 freight market update states, supply (# of carriers) will continue to surpass demand (# of loads). That said, there are plausible scenarios that could help balance supply and demand, tightening market conditions, sooner than anticipated.
Possible Q2 freight market fluctuation
The freight market is similar to the stock market. Supply (# of carriers) and demand (# of loads) determine truckload cost. The balance between supply and demand can change at any moment due to a variety of factors, including but not limited to the economy and seasonality.
For Q2, higher fuel cost and inflation, increased regulation, and overcapacity will continue to push smaller, owner-operator carriers out of business. As trucks idle, supply will decrease because there will be fewer trucks available to move goods. At the same time, demand can increase due to increased seasonal production spikes in produce and building/construction. As noted above, when the balance between supply and demand changes, so should truckload pricing.
How Shippers Can Proactively Prepare for Marketing Fluctuation
When there’s excess supply (carriers) and rates fall, trucking companies exit the market. When rates rise, new trucking companies enter the market until carrier saturation occurs and rates fall back down again. It’s a vicious cycle. “The key for shippers is to find ways to dynamically stay on top of freight market twists and to pivot quickly with little notice. Remaining static is not sustainable because freight supply and demand always changes,” said Oleg Yanchyk, Sleek Technologies CIO.
Forward-thinking shippers have replaced legacy freight procurement processes, such as RFPs, brokers, and spot quoting with AI-powered software so there are no delays when reacting to market volatility. The software is configured and dynamically finds, vets, and onboards compliant carriers so goods always arrive on time, and the shipper always pays a fair market price– what the market dictates [based on supply & demand] at that very moment in time.