25 May 2023
For shippers and carriers alike, understanding the current freight market and what’s predicted to happen soon – with rates and shipping trends – is crucial for making informed business decisions.
In this article, we cover:
- what’s been happening in the freight market
- what’s currently happening – and predicted to happen soon – in the market
- what these predictions mean for both shippers and carriers
- upcoming shipping trends & resources for navigating their associated challenges
What’s been happening in the freight market?
The past two years have proven to be wildly different freight markets – with 2021 being a carrier-favored inflationary market and 2022, a shipper-favored deflationary one.
2021’s inflationary market.
2021’s surge in consumer demand resulted in many goods needing to be moved but a shortage of drivers to keep up, ultimately forcing many shippers to pay more to get their goods and classifying the year as a carrier-favored inflationary market.
2022’s deflationary market.
With a rising inflation rate in 2022, consumer buying habits slowed and global trade seemed to come to a halt. With an excess of carriers wanting to move the few available shipments, many carriers had to severely lower their prices just to get any income – categorizing the year as a shipper-favored deflationary market.
What’s currently happening in the freight market?
The two ways in which carriers agree to move shippers’ freight are:
- instant, flexible spot rates
- long-term, consistent contract rates
Many factors are involved in determining spot and contract rates, making these rates a clear indication of the state of the market.
Understanding both current and predicted rates can be highly informative – if not imperative – for shippers and carriers to make informed business decisions and maintain profit in any market.
Current market rates & rate predictions.
So what’s been happening with these rates thus far in 2023? And what is likely to happen in the upcoming months?
Spot TL linehaul rates.
As of late May 2023, spot rates continue to lower. However, it looks as though they will soon bottom out before beginning to rise in the final months of 2023, at the earliest.
Contract TL index rates.
Contract rates have also continued to fall, dropping to their lowest since 2020. They’ll likely continue to fall into the early months of next year before rising in early spring 2024.
What these rates mean for shippers & carriers.
Before delving into our market predictions, it’s important to note that, because the market is in constant fluctuation, the following predictions can change. In order to get the best rates, it’s very important to keep an eye on when these shifts officially occur.
Let Flock keep you updated on market changes. Subscribe to our newsletter, The Haul to effortlessly stay up-to-date on all things freight.
A deflationary market when rates are low – like what is happening now – is the perfect time for shippers to secure both types of rates.
With these rates likely to rise as soon as later this year, shippers should consider securing low spot rates now before rates start to go up.
Shippers should be looking to secure contracts before contract rates are predicted to rise, meaning anytime between now and early 2024. Locking in today’s low rates before they go back up will keep shippers saving even once the market has flipped back into carrier favor.
With spot rates and contract rates both low, 2023 has so far leaned more favorable for shippers. However, with both rates expected to increase in the coming months, the market will likely start tipping back into carrier favor potentially as soon as late this year.
While right now is not an ideal time to secure spot rates, it is a better time to utilize them than locking into contracts. Utilizing spot rates should be more lucrative later this year.
Because contract rates are so low and are expected to get even lower, if possible, carriers should hold off on setting contracts until they rise again in 2024. Locking into contract rates now may mean missing out on 2024’s higher rates.
Persisting & upcoming shipping trends.
In addition to understanding market rates, two additional factors shippers and carriers should be aware of in order to stay ahead of the curve are:
- the two inefficiencies continuously plaguing every industry
- upcoming shipping trends, such as industries’ peak seasons
Trends consistently challenging all industries.
Our recent study with Drive Research found that two inefficiencies afflict all industries – in both deflationary and inflationary markets.
Surprise damage & late fees.
Despite being considered a shipper-favored market in 2022, 10x the amount of shippers reported experiencing negative effects of OTIF regulations than they did in carrier-favored 2021 – costing them an average of $1,988 for each damaged & late LTL shipment in 2022.
Nearly half of truckloads shipped in 2022 moved partially empty – negatively impacting both shippers and carriers by wasting money, time, and fuel.
The solution: Flock’s shared truckloads (STL).
Using cutting-edge, patented technology, shared truckload efficiently pools compatible shipments from multiple shippers onto one truck – then sends it all on a faster and safer hubless route.
By filling trucks to capacity and moving goods quickly, safely, and reliably, STL cuts shippers’ costs by up to 20% while earning carriers up to 20% more per haul compared to traditional modes – making it an efficient tool for both parties regardless of market conditions.
Upcoming peak seasons: retail & F&B shipping.
With the summer peak season ramping up for both the food and beverage (F&B) and retail shipping industries, now is an especially important time for shippers and carriers to enhance operational efficiency.
Utilize some of our recent resources to:
- gain actionable, industry-specific insights on topics like retail consolidation, high-value electronics insurance, wholesale distribution, and more
- get detailed solutions to beverage shipping’s most costly challenges
While this time of year can be beneficial for both carriers and shippers, peak season exacerbates everyday pressures while bringing its own challenges, such as:
Strict, hard-to-meet deliveries.
With already tightening consumer delivery expectations, the increased order volumes and tricky inventory management associated with peak season make late fees even more likely than normal.
High risk of damage.
Already a big problem for many industries – costing an average of $4,503 per LTL claim in 2022 – damages exponentially increase in peak season. This is because higher volume means more likelihood of rushed handling, which ups the chances of damage.
On a typical day, inconsistent or evasive carriers threaten relationships with retailers, distributors, and distribution centers — greatly putting profit and reputation at risk. Peak season’s extraordinarily strict delivery windows and increased speed make working with an unreliable service especially harmful.
Limited access to additional capacity.
With many businesses seeking additional trailer space for their peak season shipments, finding available trucks and deck space is challenging.
Tips for peak season.
Combat peak-season shipping challenges by continuously learning new tactics, such as how to best leverage technology, communicate successfully, and more.
A few of our favorite tips for smoothly handling peak season are to:
Having a buffer of at least a few weeks can help shippers not only avoid the stress of a potential late delivery but reduces the likelihood that a carrier will charge more for fuel or out-of-route mileage due to a last-minute booking. Knowing your historical data – while factoring in current conditions – can help you anticipate shipment quantities and demand.
Ship different products at different times with different methods. For example, use faster, more expensive freight options for high-priority or perishable shipments and more affordable modes for less pressing shipments.
With the amplified activity of peak season making lost or damaged freight more likely, it’s worth it for shippers to protect freight with shipping insurance – especially for high-value, perishable, or otherwise time-sensitive products.
Maximize your bottom line with Flock.
Flock makes it easier for both shippers and carriers to prioritize profit and the planet.
By sharing truck space and eliminating terminals, STL not only saves shippers money while earning carriers more, it betters the planet, too – slashing CO2e emissions by up to 40%.
How Flock benefits shippers.
With Flock, you save $100,000s by saying goodbye to OTIF fees – delivering on time and 99.8% damage-free by moving goods along optimized, terminal-free routes. Plus, STL’s sophisticated algorithm is the perfect tool to help you find truck space for your extra peak season shipments.
And by only paying for the truck space you need, STL can cut your costs by up to 20% per shipment compared to traditional modes.
Ready to learn how Flock can benefit your business? Request a demo.
How Flock benefits carriers.
By combining shipments from multiple shippers to fill your entire trailer space, our one-of-a-kind shared truckloads earn you up to 20% more per haul by utilizing every linear foot of capacity.
Plus, when you work with Flock, you can finally stop wasting time scrolling through load boards. With personalized load recommendations and instant notifications on preferred loads, higher-paying freight finds you.
Ready to learn how Flock can benefit your fleet? Request a demo.