Trucking contracts held hostage by ongoing uncertainty

Spot rates are the floor

Looking at the relationship between spot (NTIL12) and contract rates, spot rates continue to offer discounts for those willing to buy capacity on the fly. However, the divergence between the two is notable: spot rates are gradually increasing, while contract rates remain flat to slightly lower.

In this sense, the spot market represents the true floor of pricing — where all operational efficiencies have been realized — and that floor is rising.

The spot data is based on broker data who target smaller fleets and owner operators while the contract data is based on invoices between larger fleets and larger shipping operations. It is helpful to think about the white line as the rate situation when using 20-30 carriers, while the orange line represents leveraging 200,000 carrier networks. This is why the spot rate tends to be lower. 

Spot data comes primarily from brokers targeting smaller fleets and owner-operators, while contract data is based on invoices between larger fleets and major shippers. Put another way: the white line reflects conditions when working with 20–30 carriers, while the orange line reflects leveraging a 200,000-carrier network. This explains why spot rates are typically lower.

FMCSA data shows the market has been losing 100–200 carriers per week over the past 18 months. Because this data lags — carriers take time to report or be recognized as inactive — the true figure is likely higher. This attrition also helps explain the gradual upward pressure on spot rates.

A market in limbo

From a shipper’s perspective, uncertainty still dominates. Transportation procurement has been relatively easy in recent years, but the data now suggests conditions are becoming more challenging — though not enough to drive long-term rates higher.

Perhaps the bigger signal is that contract rates have not meaningfully fallen despite ongoing softness. This may reflect shipper hesitancy to push for lower costs in an environment many see as unsustainable. According to Zac Rogers, co-author of the Logistics Managers’ Index (LMI), many respondents were expecting significant rate increases at this point last year — expectations that remain intact this year despite the lack of meaningful upward pressure.

In short, while shippers expect conditions to change, carriers are holding rates steady to retain business. This will continue until it no longer can. The best advice for shippers is to ensure their high-value lanes are priced above spot market benchmarks, as those are going out of date quickly and will be abandoned just as quickly when market conditions shift.

Overall, little movement is likely in the contract rate environment while shippers remain uncertain about what comes next. Cost savings may still be found in today’s market, but capturing them could increase long-term risk exposure.

About the Chart of the Week

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