Bloomberg and load board operator Truckstop are out with a new survey of mostly owner-operators and small fleets that they say shows spot-market conditions near a turning point and carrier pessimism moderating over rates and freight demand, according to a May 4 release from the two companies.
“While we don't believe we're out of the woods yet, the shift in sentiment is encouraging,” said Lee Klaskow, senior freight transportation and logistics analyst at Bloomberg Intelligence. “Conditions should improve due to seasonal trends, coupled with higher-cost capacity being forced out of the market. Rates may get additional support as inventory levels return to more normal levels.”
“We agree with the sentiment of those surveyed that spot-market conditions are near a turning point,” Truckstop CEO Kendra Tucker said.
See also: More signs add to anxiety over rough freight economy
Of the 123 respondents sampled for the Bloomberg and Truckstop first-quarter 2023 survey, 58% operate just one tractor but do so in a wide range of freight-hauling sectors: dry van, flatbed, temperature-controlled, and specialized/diversified carriers.
Earlier this week, another measure of freight shipments, U.S. Bank’s Freight Payment Index, showed that shipments moved by truck dropped 6.1% nationwide in Q1 this year, Jan. 1 through March 31. The drop in volume was felt most in the Southeast, West, and Northeast, which all saw double-digit drops in shipments, but the results from the U.S. Bank index were much better in other regions of the U.S. like the Southwest.
Other reports of late have shown a spot market that is bottoming or nearing a bottom.
Bloomberg and Truckstop said the Q1 2023 survey results showed:
- Carriers actually sense better spot-market conditions ahead: Demand expectations for the next three to six months have improved, though remain below historical first-quarter averages. The rate outlook is inching up, aided by seasonal trends and more capacity coming out of the spot market.
- Carriers see better short-term demand: While about 48% of respondents experienced weaker demand last quarter, 60% expect volumes to rise over the next three to six months, about 20 percentage points higher than carriers did in Bloomberg and Truckstop’s last survey, of Q4 2022. Still, improved sentiment isn't motivating carriers to buy additional or replacement tractors, with only 29% of the Q1 2023 respondents saying they might make a purchase over the next six months. Soft demand was cited by 42% of respondents as the main reason for not buying trucks and trailers, followed by higher costs (32%).
- Spot-market volumes declined 9% on average in Q1 2023: Demand remained soft for carriers in the spot market in Q1, with 71% of respondents seeing a drop from Q4 2022 and about 48% reporting lower volume growth from a year earlier. Dry-van carriers appear to be the hardest hit, according to this survey, with 85% noting demand was down compared to last year, while flatbed carriers were the most resilient with 42% seeing lower volumes. This backdrop likely will push higher-cost operators out of the market, Bloomberg and Truckstop predicted.
Separate report shows rates improving slightly
Another report from Truckstop and another data analysis partner, FTR Transportation Intelligence, showed a slight improvement in freight rates during the week of April 28. After falling for five straight weeks and declining in 12 of 16 weeks so far this year, broker-posted spot-market rates for refrigerated equipment (reefer) in Truckstop's system saw their largest increase of the year, according to Spot Market Insights, the weekly release from Truckstop and FTR.
According to the April 28 report, the total broker-posted rates, between dry van, reefer, and flatbed, rose slightly more than 1 cent that week, which was half as large as the prior week’s increase. Also, the total market rate was nearly 22% below the same 2022 week but about 3% above the five-year average.
Total load activity, or volume, increased 5.4% and was up for a third straight week, which had not happened since the second week of this year. However, volume was about 48% below the same week last year and more than 21% below the five-year average, a reflection of the spot market’s volatility compared to last year.
Dry van rates have been particularly hard-hit. Van rates ticked up less than 1 cent, according to the April 28 Truckstop/FTR report, but the gain ended a seven-week streak of decreases. Also, rates were more than 23% below the same 2022 week and about 7% below the five-year average for the week.
