Research built for present and future c-suite executives.
Last week, national average dry van truckload spot rates on Truckstop.com’s load boards reached a new YTD high at $2.76/mile, inclusive of fuel.
A sequence of fundamental factors is driving trucking spot rates ever higher, in our view. First, the slow-moving capacity cycle is providing a floor on rates and tender rejections. Trucking carriers exited the industry in huge numbers from the first quarter of 2019 through the middle of 2020. Then we saw a positive inflection in demand for trucking transportation, which moves faster than capacity, as consumer spending shifted from services to goods. Those converging patterns tightened capacity, pushing tender rejections higher, and ultimately led to widespread spot market volatility and inflation.
The point here is twofold. First, current conditions are fundamental and were triggered by the coronavirus pandemic, not caused by it, and second, monitoring daily tender rejections will give shippers, carriers and brokers insight into near-term moves in spot rates. For now, the national average tender rejection rate has stabilized at around 25%, meaning that every fourth load tendered to large asset-based carriers and 3PLs is being rejected. We wouldn’t be surprised at all to see that rate go higher as we approach peak holiday retail season.
You have selected content that's only available to members of FreightWaves Passport. As a member, you gain immediate access to the most in-depth and informative freight research available. It's your gateway to continuing education.
Members also get:
Click below to learn more and sign up today!
Subscribe
Existing Passport subscribers may log in using the form below.
John Paul conducts research on multimodal freight markets and holds a Ph.D. in English literature from the University of Michigan. Prior to building a research team at FreightWaves, JP spent two years on the editorial side covering trucking markets, freight brokerage, and M&A.