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.
DAT Freight and Analytics, operating the DAT One online freight marketplace and DAT iQ data analytics service, recently highlighted positive news in the gap between spot and contract rates. While spot rates typically respond faster to market changes, the gap between spot and contract rates narrows when the market stabilizes.
“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.”
On 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.
“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, although there are signs of shifting numbers with a decrease in truck sales and record-setting for-hire revocations.
FTR forecasts a gradual upward trend in trucking spot rates throughout 2024. The Cass Freight Index for December reported a 2.1% increase in shipments, while ACT Research’s report suggests that the freight cycle is poised to enter a new stage in 2024.
The report, written by ACT Research’s vice president and senior analyst Tim Denoyer, stated, “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.”
In another ACT Research report, titled Freight Cycle Poised to Enter New Stage in 2024, Denoyer wrote, “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. 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.
Source: The Trucker
