The conditions that led to soaring trucking conditions, rates, and profits last year are largely history at this point. Where things go from here, as the Fed raises interest rates to slow the economy and address record inflation, is unclear. Trucking has long been viewed as an early indicator of economic cycles, but the pandemic and other global issues have clouded the picture.
Employment data from recent months suggest that drivers are readily available for larger carriers, although much of that growth is likely coming at the expense of very small carriers that are failing due to record diesel prices and normalizing spot rates. Those weaker spot market rates and skyrocketing fuel costs during the first half of 2022 overshadowed strong freight volumes overall and record-high prices for loads moving under contract.
Shippers are paying historically high truckload rates to ensure that more of their loads move under contract, reducing demand for trucks on the spot market. The galloping spot market we saw in the wake of COVID-19 and supply chain challenges led to the growth of small carriers with their own authority. But high fuel prices and the slide in spot rates have had a profound for small trucking companies and owner-operators that use the spot market, explains DAT. Spot rates do not include a separate fuel surcharge, which makes it difficult for carriers to ensure that the rate they negotiate will adequately cover their fuel costs.
“Shippers are seeing increased routing guide compliance at the same time truckers on the spot market are contending with extreme volatility in lower rates and higher fuel costs,” said Ken Adamo, DAT’s Chief of Analytics. “We expect these conditions to continue. However, we have yet to see the glut of capacity and overall lack of freight that produced a prolonged down-cycle in late 2018 and 2019.”
The Constrained Highway System
This data and analysis first appeared in the August 2022 special Fact Book issue of Heavy Duty Trucking.
2022 Fact Book
The Trucking Industry Numbers Impacting the Bottom Line
Heavy Duty Trucking’s annual Fact Book is designed to provide a snapshot of the current state of the industry, where it’s been, and where it’s going. 2022 is the eighth year for the HDT Fact Book. Dive into the other topics: