Author Topic: The freight market downturn is a year old. When will the market turn around?  (Read 331 times)

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Offline Ptarmigan

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The freight market downturn is a year old. When will the market turn around?

It has been a year since I wrote “Why I believe a freight recession is imminent.” The article, published on March 31, 2022, stated my case for why I thought the U.S. trucking market was headed for a significant downturn.

The information in the article was based on analysis from SONAR, FreightWaves’ high-frequency freight data and price reporting platform. SONAR is the market’s leading freight market analytics and price reporting system.

At first, there was a great deal of vitriol aimed at the FreightWaves analysis and also disagreement about the health of the freight market. This was most pronounced coming from asset-based truckload carriers that predominantly operate in the contract market. The downturn, they believed, was a spot market phenomenon that wouldn’t impact them.

Others contested the SONAR data and the FreightWaves staff analysis because they were using lagging indicators and government data. These tools have consistently proved to have little value and do not provide actionable insights that participants can use to manage their business — as SONAR does. Sure, they may provide some level of insight about what happened six months ago, but in the freight business, that might as well be a lifetime ago.

The freight market is one of the most volatile markets on the planet. Hot markets can turn ice cold in a flash, particularly after the federal government and central bankers flooded our economy with so much liquidity and then proceeded to institute the fastest monetary tightening cycle in history.

The freight market is very volatile. This could effect supply chain.

Truckload volumes match 2018 levels, a good year for trucking. But that isn’t a good thing.
Trucking tender volumes are currently running at 2018 levels.

Tender volumes (OTVI.USA) track the number of truckloads electronically offered by shippers to carriers in the contract market. The white line in the chart below represents 2023, while the yellow line represents 2018. Orange represents 2019.

2018 was a good year for trucking, but with so much capacity added over the past five years, a reset to those levels is not cause for celebration.

Trucking level is at 2018 level, which looks good. Actually, that should be concerning.
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Offline Rick

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Why the big drops in June, July, Sept and Dec?