As tender rejections tighten and spot rates rise again, it’s becoming increasingly clear that contract rates will rise in the 2021 cycle. Last week Zach Strickland, director of freight market intelligence at FreightWaves, predicted a 4-6% increase in contract rates and our view is in line.

For now, though, uncertainty around consumer demand, macroeconomic performance and fiscal stimulus has kept carriers from adding capacity. Last week we wrote that shippers were capitulating in reference to generous rates on mini-bids and cost-plus projects, but it will be months before transportation providers’ contracted books of business are completely repriced upward.

National average spot rates and tender rejections are both just under year-to-date highs, indicating that the trucking rally has entered Q4 in a strong position. Our view is that peak season will be volatile to the upside as shippers, particularly retailers, move aggressively to secure capacity and reliable service. So far, no modes that impact trucking — ocean, air or rail intermodal — have shown any signs of slack.

In recent weeks, we’ve also seen a pickup in M&A deal activity in the transportation space, from Uber Freight to Fitzmark. We expect a wave of consolidation to follow COVID-19, when activity was suppressed and dry powder piled up. More on that to come.

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