Truckload spot rates saw their first significant upswing in the past year from late November into early January, tightening the gap between spot and contract rates.
While market conditions remain broadly loose, there are increasing signs of slowing supply – "key to the bottoming process," said Tim Denoyer, ACT Research vice president and senior analyst.
Slowing supply is key for the U.S. truckload market to transition from the late-cycle stage experienced in 2022 to the cycle-bottom phase, which Denoyer said features a thinning of marginal capacity amid lower rates, preceding an early-cycle market tightening. “Because rates are now far below costs in some cases, the market may experience both the cycle-bottom and early-cycle phases in 2023," he added.
FTR Vice President of Trucking Avery Vise expects truck utilization rates to drop in lock-step with the economy. The 10-year average for truck use is around 91%, but the market is already below that mark, FTR says, and it’s expected to keep falling to around 86% by late third quarter of this year.
Rates rang in the new year stronger than their exit. The average broker-to-carrier rates based on contributed transaction data through Jan. 9 show van rates at $2.51 a mile, 11 cents higher than the average in December; reefer at $2.95 a mile, 14 cents higher than December; and flatbed at $2.79 a mile, 5 cents higher than December, according to DAT.
The total number of loads on the DAT One network increased by 14% to 2.2 million loads the week of Jan. 1-7, and the posting total exceeded 2 million for the first time since the week after Thanksgiving.
Data from Truckstop and FTR Transportation Intelligence show that the final two weeks of 2022 saw a large increase in broker-posted van segment rates, as usually happens in late December, and the first week of January saw a notable drop in rates as it usually does. Even so, dry van and refrigerated rates started 2023 well above pre-holiday levels. Further moderation in January would be the norm absent a disruption, such as extreme and widespread winter weather, according to FTR. Flatbed rates are basically where they sat before the holidays after declines in the latest two weeks.
