Gradual Optimism in Freight Market as Experts Predict Stabilization
After months of remaining at a low point, there’s a glimmer of optimism from expert forecasters and analysts regarding the future of freight volumes and rates. However, caution is advised as these improvements are expected to be gradual. The freight market has been facing significant challenges, but recent data suggests a potential turnaround as we move into 2024.
Spot vs. Contract Rates: A Key Indicator
DAT Freight and Analytics, which operates the DAT One online freight marketplace and DAT iQ data analytics service, recently highlighted positive news concerning the gap between spot and contract rates. Typically, spot rates respond faster to market changes, while contract rates tend to be more stable. When the gap between these rates narrows, it signals market stabilization.
“The price to move van freight under contract hit its lowest point in nearly three years,” said Ken Adamo, chief of analytics for DAT. “Entering 2024, shippers are in a strong position as they negotiate contract rates, and carriers on the spot market have some optimism that the market will turn.”
According to the DAT Trendlines page, spot load postings saw a decline in December 2023, but both dry van and refrigerated rates are now showing an increase from December. This uptick offers a positive outlook for carriers who have been navigating through a challenging market environment.
Consumer Spending and Economic Indicators
“Spending continues to remain solid. We see growth; we’re at record levels in both services and goods in spending,” said Avery Vice, vice president of trucking for FTR Transportation Intelligence. “What we see is a dramatically larger amount of money that is in the system right now to support consumption than we thought.” Despite the anticipated modest economic growth, the overabundance of truckload capacity remains a significant challenge. However, there are signs of shifting numbers with a decrease in truck sales and record-setting for-hire revocations, indicating a potential rebalancing of the market.
Forecasts and Market Trends for 2024
FTR forecasts a gradual upward trend in trucking spot rates throughout 2024, suggesting a more favorable market environment for carriers. The Cass Freight Index for December reported a 2.1% increase in shipments, indicating a potential uptick in demand. Meanwhile, ACT Research’s report suggests that the freight cycle is poised to enter a new stage in 2024, driven by positive economic indicators.
“The acceleration in real disposable incomes, supported by a surprisingly sharp disinflation, and the ongoing strong labor market suggest freight demand fundamentals will improve in 2024,” said Tim Denoyer, vice president and senior analyst at ACT Research.
Global Shipping Dynamics and Freight Demand
In another ACT Research report titled Freight Cycle Poised to Enter New Stage in 2024, Denoyer highlighted, “The new year begins with global shipping in turmoil, import freight shifting from East to West, and for-hire demand on the long side of a two-plus-year downturn. Changing ocean and inventory dynamics support an upturn in freight demand.” Global shipping challenges, particularly in the Panama and Suez canals, are contributing to shipping reroutes, adding complexity to the freight landscape.
Market Outlook and Future Stability
The Motive report predicts a less volatile 2024, noting the continued contraction of the trucking market in December due to high levels of carrier exits and low new carrier registrations. “Our data suggests that 2024’s freight market will continue to be depressed compared to the previous 24-month cycle. However, we also see signs that the market may stabilize in the second half of the year,” the report read. This potential stabilization offers hope for carriers and shippers alike, as the market adjusts to ongoing economic and operational shifts.
