Bi-Weekly Freight Market Recap: July 11, 2022 – July 22, 2022

This is a bi-weekly series that brings the insights we use to get your shipments from A to B from our carrier sales floor to your home office.

This week, Loadsmart’s Chloe Cas, breaks down what happened last week and what to expect this week in the freight market, alongside our Director of Pricing Strategy and Analytics, Jon Payne!

What is Loadsmart seeing in terms of volumes, capacity and rates in the full truckload market recently?

Volumes: Loadsmart’s volume index tracks Sonar’s OTVI pretty closely – 20% decline from March to end of April. They then recovered by 5% and have been mostly stable from may to early July. 

Capacity: The best barometer for measuring capacity/state of the spot market from LS perspective is OTRI, which at 7% has reached its lowest point in 2 years.

Rates: Rates decreased 35%+ from Feb to May after bottoming out in early May, there was a rebound into Memorial Day contrary to typical seasonality, rates were relatively stable in June. So far post July 4th, LS’s rate index shows a rate decline of 2% and we’re reproaching YTD lows.

What are some shifts or trends you foresee happening in the near future? How about longer term?

Short term: We may see some states in the middle-north of the US tighten as the weather continues to heat up in these regions and food/beverage season continues to surge, but don’t expect anything crazy given the macro environment and typical seasonality. Over July we expect to see rates decline past their YTD lows with a ~10% decline

Longer term: We expect contract rates to begin their decline more rapidly to catch up with spot rates over the next two quarters and we expect the market to remain in its soft cycle through Q2’23.

Given the current state of things, what are some recommendations for shippers navigating the market?

Remember that contract rates follow spot rates and are very likely going to decline over the coming 6-12 months. If you want to recognize cost savings as the market softens but don’t want to constantly re-bid your network, consider leveraging Loadsmart’s Reliable Contract Solution.

Are there any developments in broader economic data that could impact the freight markets?

Industrial production is slowing down from key sectors: foods, construction, misc. durable goods, clothing and more. Data from The US Census Quarterly Services Survey show that freight companies kept their revenue roughly constant in the first quarter of 2022. The estimated total revenue of freight trucking companies rose only 1% in QoQ, both for total and long haul business. This result is far below from last year’s average QoQ growth of 5%, but it shows this sector’s financial strength amid the recent economic slowdown when compared to the general service sector. The services sector’ revenue declined 5% QoQ. Note that we do expect this to potentially decline in the Q2 report.

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