Recession and inflation concerns are weighing on the profitability of small carriers in the spot market, according to a survey of owner-operators by Bloomberg Intelligence and Truckstop. The outlook for volume and growth has been less optimistic over the past three months but shows a rebalancing of the owner-operator market.
One of the hallmarks of the pandemic has been the unprecedented growth in the number of new, mostly very small, for-hire trucking companies. But the pendulum looks to be swinging back the other way for owner-operators and small fleets.
“Spot rates have been extremely volatile over the past 12 months and bullishness has started to wane among carriers,” said Lee Klaskow, senior freight transportation and logistics analyst at Bloomberg Intelligence. “But we believe current conditions will force a balancing in the market and lead to rate stabilization.”
The Bloomberg | Truckstop 2Q22 Truckload Survey shows:
- Volatility weighing on owner-operators’ psyche: About 53% of respondents expect load growth over the next six months vs. 73% in the first quarter of this year and 64% in last year’s second quarter. Flatbed carriers were most optimistic (57% expect higher volume), followed by dry van (53%). Carriers expressed increased concerns over inflation affecting demand, especially the impact of surging fuel prices on consumers. Not all were gloomy, with many noting demand felt “normal” after the unsustainable peaks last year.
- Carriers become bears on spot rates: Spot rates excluding fuel surcharges have fallen 21% since peaking in late December, which has weighed on sentiment. Only 43% of carriers expect the rates to rise in the next six months, the lowest level since the first quarter of 2020. About 25% of carriers expect a drop over the next three to six months.
- Carriers pumping the brakes on demand: Total demand softened in the second quarter among truckload carriers, with 62% of respondents noticing the drop from the first quarter and about 47% saying volume growth was down from the same time last year. About 84% of carriers who focused on dry-van loads saw volume declines from 2021’s second quarter, followed by reefer (77%) and diversified (41%).
- Carriers are feeling the full brunt of higher fuel costs: 96% of carriers cited fuel costs as the biggest inflationary pressure affecting the profitability of their businesses. About 81% of respondents believe they will continue to face inflationary pressures for the next six months.
The Bloomberg | Truckstop survey of owner-operators and small fleets provides timely channel checks into the health of the spot market. The sample size was 140, consists of dry-van, flatbed, temperature-controlled and specialized/diversified carriers. Of the respondents, 65% operate just one tractor. The complete survey is available to Bloomberg Terminal subscribers via BI.