In January, Valley Companies’ Jason Mansur, Vice President of Enterprise Partnerships, spoke with Trucking Dive about all things freight. From trucking capacity to the freight market bottoming out last fall to what steps brokers should take in anticipation of a market turn.
Freight Rates Could Rebound This Year: Experts
Published Mar. 7, 2024 | Trucking Dive | By Larry Avila | Trucking Editor
Trucking companies might not have to wait until next year for relief from an extended freight rate downturn.
Carriers are beginning to signal improving market trends, and that may mean higher costs in the future for supply chain managers to move freight. Already, inventories are showing signs of normalizing and executives at some major trucking firms have said a return to normal could be around the corner.
“While customers still find themselves in a heightened state of uncertainty heading into 2024, virtually no one believes the current demand and capacity cycle is a new normal, or even that it’s durable,” Mark Rourke, president and CEO at Schneider National, said during the company’s Q4 earnings call. “The consistent question is, when does it change?”
Rates won’t stay this low forever
DAT data shows spot rates at the end of 2023 were down 10-12% year-over-year, while contract rates were down between 12-14% yoy, Adamo said. As a result shippers are trying to ensure the lowest prices now in anticipation of Q3 and Q4 needs.
Improving spot rates could become problematic for shippers — even for those with signed contracts. When spot rates spiked during the pandemic and continued into 2022, the market saw carriers abandon contracts to pursue the high spot rates, said Jonathan Phares, assistant professor, department of supply chain management, Iowa State University.
While few experts are predicting a spike in rates, several are suggesting shippers consider changes to their logistics management strategy as they prepare for a shift to a more carrier-friendly rate market.
Mansur, with Valley Companies, said shippers should be planning now for the market to turn. That may include budgeting appropriately or negotiating with carriers to strengthen relations to ensure capacity needs will be met.
In addition, Mansur said shippers should consider offering carriers more dedicated volume and adding flexibility to their loading or unloading practices.
“There are many methods to still help carriers so that when things turn, they remember the partnership you’ve created versus simply being just a rate shop,” he said.