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Fleets Explained: How do freight rates work?

Aug. 16, 2024
Freight rates are the lifeblood of the for-hire trucking industry. Determined by supply and demand, rates work differently among trucking segments and between spot and contract freight.

In for-hire trucking, shippers pay carriers to move freight. This payment is generally a per-mile rate with a fuel surcharge.

Freight rates are the primary source of income in for-hire trucking and a major indicator of the industry's health.

Rates are the products of countless market conditions. Different trucking segments have slightly different rates, particularly between spot and contract freight.

See also: Fleets Explained: What are the trucking segments?

Looking at the chart above, it looks like DAT's measure of dry van freight rates experienced about three major boom-and-bust cycles since 2015. Rates peaked around January 2015, mid-2018, and January 2022. Rates fell to their cyclical troughs around mid-2016, January 2020, and from mid-2023 through mid-2024.

These cycles are built by the same factors of supply and demand as those affecting individual rates. An excess of available carriers brings rates down—excess capacity is one major factor contributing to the latest trough in this nine-year rate chart.

About the Author

Jeremy Wolfe | Editor

Editor Jeremy Wolfe joined the FleetOwner team in February 2024. He graduated from the University of Wisconsin-Stevens Point with majors in English and Philosophy. He previously served as Editor for Endeavor Business Media's Water Group publications.

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