Welcome to September’s Monthly Episode of Loadsmart First Look. This is a monthly series that dives into the domestic freight market, the economy as a backdrop to the trucking industry, and the latest developments and technologies that are changing the supply chain.
This month, as freight demand and volumes exceed the 40-year record highs we saw in 2017 and 2018, our VP of Operations, Jim Nicholson, brought in a little help from Brent Hutto, Chief Relationship Officer @ Truckstop.com to discuss the boom bust and boom again market.
Jim: It’s been a wild year with the pandemic and the shift in consumer behavior that’s thrown freight markets out of whack. I’m curious to hear what you guys are seeing at Truckstop.
Brent: I’ve been alive for 53 years and you see a lot of ups and downs and the old saying is “may you live in interesting times” and certainly we are living in interesting times. Who would have thought that we would have seen something more different or better than 2017/2018 that was a 40 year high in an industry. That was remarkable – people set their careers and retirements on how well they did in 2017/2018 and who would have thought that something would exceed that and we are at that point and have been for the last 7 or 8 weeks above 2017/ 2018 40 year historical highs, which is remarkable considering where we were in March and where the marketplace has come from.
It was cruising along at better than normal rates or better than normal volumes and rates where we are about 2 dollars a load and about 400K or 500K loads on Truckstop.com. So that’s pretty healthy and it was like that all the way through 2019 as well. Then we got to the pandemic and the quarantine happened, and we had a huge surge, but that was sort of like a fear reaction. Then we had the most incredible cliff you’ve ever seen in your life where it literally went from 700K loads on Truckstop in a 24 hour period down to 164K loads. An unbelievable drop. Rates went from above 2 dollars down to a $1.60. We had truckers lining up in DC saying we had price collusion, which the data will show you, it’s never happened, it does not happen in a competitive marketplace.
But what happened after that no one could have predicted. I think the thing to look at and consider because we’re in that market where we see those indicators, never in the history of man has an entire country much less an entire world all worked together to solve one problem. Now granted many other countries in the world did not fare as well as the US did, but the US economy was already very, very healthy. So this rebound, it was a V rebound, it was a super V. In the economic world it means it went down and came back right back up.
A super v means it went like an outlier, it just exploded which is what it’s done. It went from a bottom of April 17 at 164K loads to the last 4 straight weeks it’s been over 800K loads on Truckstop.com. And the market pressure has gone from about 30 which is normal or actually below normal when we had the quarantine and the cliff to above 100. The Market Demand Index, the pressure in the market has reached historic highs 4 straight weeks in a row and that’s over a 25 year old period which just blows your mind to think how much this market has come back to benefit the carrier mostly and the broker once rates can get adjusted.
Jim: I’ve been in this industry for 12 to 13 years now it’s nothing that I’ve seen in terms of what you talked about: the sharp ascent and before you knew it the bottom fell out and it dropped and in a shorter period then it rose. But it’s fascinating—so 700k loads to 164 loads in a period of 2 weeks and currently the last 4 weeks above 800K loads
Brent: And it hasn’t ebbed, it’s not a plateau yet. Here’s the thing that should blow your viewers mind. We’re still not at the demand for volume of freight that we were in the beginning of 2020. So in the beginning of 2020, all of 2019, and 2020 we were about 65 million loads per month and that’s the entire marketplace. It’s about 750-800 million loads in all the freight in NA. By the way, 50% of all the freight in the world moves in the connected 48. So it’s obviously a massive marketplace. But usually the market is 65 million loads per month, we’re still – this is this past month, in July, – we’re only at 55 million this past month.
Jim: I was talking to another industry insider today and we talked about the shift in some of the shipper behavior that was prior of really running a supply chain on a lean philosophy but risk management wasn’t necessarily the primary focus of running a supply chain so you see somewhat of a shift from running lean to getting caught off guard and now building up inventories to sustain which to your point looking at Q1 if inventories are really built up that obviously has an effect on domestic freight markets in a different direction.
I want to spend some time talking about tech – truscsktop.com is definitely one of the leading platforms, a public capacity platform. And you cater to a variety of different carriers with multiple different products, but you guys entered into this digital load booking journey and launched ‘book it now’ last year I believe. I’m curious to hear looking back at the last 12 months how has the journey evolved, how is the adoption amongst your carrier partners and broker brokers and just any learnings you might have.
Brent: In technology, it’s said that it’s not the big that eats the small it’s the fast that eats the slow. So you gotta be fast. Freight velocity is very, very important, the ease of using a system is very important to the user of the system because time as we all know in freight transportation is money. So being able to provide the right experience, the right opportunity to view freight and transport freight is paramount.
We all know that in this marketplace that technology is being adopted in lots of different areas and being utilized and certainly the transparency of information that Truckstop.com has been a part of since 1995—we’ve been cloud before cloud was a word—the idea of that process has created an opportunity for technology to continue to revolutionize what goes on in freight transportation.
And we as a platform recognized five or six years ago as other connected type network marketplaces—the way in which you buy and move stocks is completely automated, the way we all know the way we book and move planes, the way that personal transportation moved when Uber came in and revolutionized the taxi industry. That this was coming to transportation freight because the last efficient thing you can move out of it is the manual process.
Notice I said manual process, I’m not talking about taking the relationship out of it because you can’t. There’s too many moving pieces and parts and there’s too much that goes on. You can’t take the human relationship out of it. I think that would put more risk into it than it would be worth. But the idea of automating this was necessary conclusion in a marketplace that has hundreds of millions of transactions that go on and so that was the idea on looking at a dynamic marketplace that’s already transactional – how do you make it more efficient so that the players who player in it – the brokers, the carriers, the shippers that move their goods in it – can actually a better benefit out of it and everyone inside of it can be enabled to grow their business.
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