Motor Carrier Spot freight strikes back

Mike

Well-Known Member
Staff member
Spot freight is coming back and tightening capacity across the country, even as rates out of Los Angeles fade (typical for this time of year).

On a national basis, contracted truckload tenders are being rejected at a rate of 6.4%, just below the crucial 7-10% level that ‘flips’ the market into an inflationary melt-up. When large asset-based carriers reject 7% or more of their contracted freight, it flows into the spot market, raising rates, and attracting more capacity, which results in more contracted freight being rejected, and the flywheel turns faster, until demand cools or contract rates are reset higher.

One broker we talked to this morning said that as the summer heats up, freight brokers will see margin compression, especially on their contracted freight. While July is typically softer than June, the shape of this summer is not set in stone by any means. There’s too much uncertainty on both the demand and capacity sides of the trucking market to predict capacity availability or the governing dynamic between the contract and spot markets.

 

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