Truckload Data Suggests The Freight Market is Finally Stabilizing
First quarters are always the most difficult periods in the annual freight calendar. A lot of these difficulties are a result of construction taking a pause due to cold and inclement weather situations and retailers eliminate their excess holiday inventory. Most commonly these soft first quarters are preceded by strong fourth quarters in the prior year. During these robust fourth quarters, freight companies get to enjoy the yearly peak season which enables them to collect an outsized portion of their profits. For carriers, spring is an opportunity to experience some market stability and potential for market accelerations.
Did winter come early this past year?
It is possible that freight winter started in November and we are now experiencing an earlier than usual thaw. According to numerous freight executives, the first two weeks of the first quarter are shaping up to be better than anticipated. Previously expectations were extremely low after the previous weak peak that was seen last year. Heading into the quarter, executives were predicting a significant collapse, with some experts anticipating the first quarter to be the worst in the past four decades.
Truckload spot rates, according to the FreightWaves National Truckload Index, hit a low of $1.67 on Nov. 17, 2022, and have since bounced back to $1.98 per mile.
Trucking tender volumes also suggest that the direst of predictions have not played out. Tender volumes on the Outbound Tender Volume Index (OTVI), an index that tracks the volumes of load requests from shippers to carriers, show that volumes briefly dipped below 2019 and 2020 levels, but they have since broken away from this baseline.
If the first weeks of this first quarter are an omen, then freight carriers likely already bottomed last year and should expect a far less volatile 2023.
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