For the past two years, shippers have had enormous leverage in the freight market, as excess capacity has kept rates under significant pressure. Shippers, who suffered under the weight of sizable market stress during COVID have inflicted “shippers revenge” on motor carriers, something we were warned was coming back in August 2022.
Truckload spot rates, when adjusted for inflation, have plummeted to lows not seen since 2009.
In the early part of the Great Freight Recession, contract rates stayed persistently high as shippers monitored the market and wondered if the market reset was a short-term development or something greater.
In the first quarter of 2023, reassured that the Great Freight Recession was unlikely to end quickly, shippers started to insist on significant rate concessions from carriers. This process accelerated earlier this year.
As a result, carrier profitability hit 14-year lows in the first quarter.
According to FreightWaves channel checks, shippers still insist on rate concessions from motor carriers. This may be ill-advised.
On April 17, FreightWaves reported that we were likely at the bottom of the market and the “end to the worst freight markets in history may be closer than it appears.”
We believe that this analysis is still true, and shippers, not carriers, bear the greater risk. In fact, if the economy continues to grow, freight market volumes will do so as well.
While we are not expecting a massive surge in freight activity, we continue to monitor risks that could change this perspective.
Like all commodity markets, rates become massively volatile when an unexpected sudden demand shock occurs. For trucking markets, no event has more short-term impact on demand than a major hurricane hitting a large U.S. city.
FreightWaves’ early success was largely due to its coverage of Hurricane Harvey, which devastated Galveston and parts of the Texas Gulf Coast around Houston.
NOAA released its May hurricane forecast, where it spells a warning to shippers to prepare for significant disruptions. It is the most aggressive forecast on record. NOAA forecasts that there will be 17-25 named storms, with 4-7 being Category 3 or greater. On average, a hurricane season usually has 14 named storms and three Category 3 or greater storms.
The administration described the 2024 season as “hyperactive” and “the highest NOAA has ever issued in the May forecast.”
Shippers that assume they will be able to react to changing market conditions, in time, may find that carriers lack sympathy for their plight. In fact, carriers have been warning shippers that forcing significant rate concessions will be a mistake when the market flips in the carrier’s favor.
Whether the hurricane season lives up to NOAA’s forecast or ends on a whimper, one thing is certain: at some point, the freight market pendulum will swing against shippers and when it does trucking firms will inflict carrier revenge.
In many ways, Carrier’s revenge is more vicious than shipper’s revenge in the sense that price is easier for shippers to deal with than having freight left on their docks and factories disrupted.
Not optimistic
This is just another click bait article from another freit waves .
Nothing will change current freight market until more companies get out . Also European Chicago mafias will haul cheap no matter what
Big Jim Trucking
And with the active tornado season currently destroying the heartland and midwest and plains so far this season it’s time to raise the rates on the shippers and do it fast and hard
Big Jim Trucking
It can’t happen soon enough it’s going to be sweet revenge against the shippers for trying to keep the freight rates so damn low that trucking companies are having a hard time making ends meet so it’s time to get our revenge against the shipping and manufacturing industry.
#POWERTOTHEAMERICANTRUCKERS
Robert Anderson
Truckers should move nothing until there is soiled Government regulations on shipping rates.
And Brokers are forced to comply.
Let’s see if the Imported Trucker Cooperate or if they are Scabs that need to be put in their place.
SuperDan Trucking
Many carriers have been running at near break even costs for over 2 years. Also, some of us remember just prior to covid, the same was true. In fact, over the last decade, carriers have made few if any profits for 2 years while freight brokers and shoppers have made EXTREME profits for no less than 8. Meanwhile, shippers and brokers are upset they didn’t make record profits for a mere year during covid. They’re making them now, and prior to covid.
Personally, I brought many supplies including water, food, and generators into the hardest hit zones in NC, Houston, the Florida, and the panhandle. In fact, I was the first truck in with many of these necessary supplies. Did I make record profits? No! I merely helped this in need.
My point? You don’t need to make record profits when so many millions are hurting. The fact you’re making profits while many millions are breaking even or falling behind says A LOT.