Freight Pricing: Who REALLY Holds the Power?

Tabi’s Rush Feldhacker breaks down who currently holds the pricing power in the unpredictable freight market using their new Pricing Pressure Index. Learn how brokers are leveraging data to make smarter spot rate decisions, and why shippers are feeling the market shift later than expected. Discover the latest trends and what to expect in the second half of the year.

A new freight pricing index from rate management platform Tabi shows brokers and carriers still hold the upper hand on spot pricing, but that advantage has eroded noticeably over the past month. The TABI Pricing Pressure Index currently reads 36 on a scale of 0 to 100, where 0 represents maximum pricing power for brokers and carriers and 100 represents maximum pricing power for shippers. The index has risen 7 points in the last 30 days, a move that reflects a measurable softening in spot market conditions.

“Brokers are still winning spot volumes at a significant rate with good margins, but it’s nowhere near what it was 3 months ago,” said Rush Feldhacker, whose firm Tabi aggregates data from more than 1.5 million spot loads flowing through its system each month. The index is published monthly and is available free on Tabi’s website.

The index’s construction accounts for load volume, margin, awarded margin, and bid margin. Feldhacker noted the reading is significantly higher than it would have been at the same point last year, suggesting brokers are still operating in favorable territory even as conditions tighten. For comparison, FreightWaves’ Sonar Pricing Power Index — which is inversely scaled — currently sits at 70, also indicating broker and carrier leverage over shippers.

“The ones that are winning are looking at their win rates on their large customers by lane. They’re setting up capacity strategies based off of where the largest opportunity is. And they’re not chasing freight that doesn’t pencil out for them. They’re only pursuing profitable freight, and they’re being very strategic about it.”

Feldhacker, who spent 16 years as a freight broker including an early stint at Access America Transport starting in 2010, said the current capacity-driven rate environment is catching some brokers off guard. Unlike demand-driven market shifts — where higher volumes provide more opportunities to profit — capacity-driven tightening produces similar-looking rate charts but fewer loads to cover. “There’s the same amount of loads I’m covering. I just happen to be making more on them,” he said.

Shippers, meanwhile, are feeling the squeeze differently. Because their underlying business volumes have not grown, they cannot absorb rising transportation costs the way they could during demand-driven booms. Feldhacker noted that contract rates provide only a temporary buffer since tender commitments are not truly enforceable, and shippers typically see the impact of a market shift 3 to 4 months after brokers do — once tender rejections widen enough to disrupt their operations. He recalled speaking with a shipper in early January of this year who believed soft market conditions were “the new normal” even as the market was already turning.

On the second half outlook, Feldhacker pointed to disciplined data use as the dividing line between brokers who will capture peak-season upside and those who will miss it. Brokers still making pricing decisions “from the hip” without analyzing win rates by lane and customer are chasing volume the way the market rewarded several years ago — a strategy that no longer pencils out in the current environment. Those investing in analytics and enforcing organization-wide pricing rules are positioned to capitalize as conditions evolve.

• Tabi’s TAVI Pricing Pressure Index sits at 36 — broker-favored territory — but has risen 7 points in the past month, signaling spot market normalization.
• The index draws on more than 1.5 million spot loads processed monthly and factors in volume, margin, awarded margin, and bid margin.
• Shippers face a 3-to-4-month lag in feeling market shifts, and a capacity-driven rate increase hits harder because their own volumes have not grown to offset the cost.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.