Analysts Rate Freight Cycle at or Near Bottom

Several leading industry reports point toward a freight cycle has hit bottom or will soon. DAT analytics reports June numbers indicate the spot rate bottom has already happened. ACT Research said freight demand is near the bottom and market rebalancing is underway.

Freight markets have continued a downward trend, according to the Cass Freight Index, which is based on the transactions (invoices) processed by Cass. Its numbers indicate a year-over-year decline that started 18 months ago. According to the report, previous downcycles have lasted 21 to 28 months.

Freight Forecast

According to the latest ACT Freight Forecast U.S. Rate and Volume Outlook report, driver capacity models suggest the record declines in freight rates should be pushing out more jobs, and upheavals in the less-than-truckload market could press the industry rebalancing forward.

“While there may be capacity reduction in LTL soon, fleets are focused on retention despite record rate reductions, resulting in a gradual rebalancing,” said Tim Denoyer, ACT Research’s vice president and senior analyst.

He said the preliminary Bureau of Labor Statistics data set added 2,300 jobs in May, pointing out that some of that probably came from the owner-operator community, where net revocations of DOT operating authorities continue apace.

ACT Research anticipates 2,950 net revocations in May, bringing the total contraction in the industry since last October to over 15,000 fleets.

Rates and Volume

“The trajectory of spot rates has changed in the past couple of months, and we think demand fundamentals are likely to improve from here as we pass the worst of the destock. So, more freight market dynamics are in store down the road,” Denoyer added.

Truckload freight volumes and spot rates held firm in June, while contract rates fell to their lowest points in almost two years, said DAT Freight & Analytics, which operates a major online freight marketplace and the DAT iQ data analytics service.

“The gap between spot and contract rates was the narrowest since April 2022,” said Ken Adamo, DAT chief of analytics. “Spot rates for van and refrigerated freight increased for the third straight month, and volumes were almost unchanged from May. These are signs that spot truckload prices have reached the bottom of the current freight cycle.”

Truckload Volume

The DAT Truckload Volume Index reports volumes held steady in June, with van down 1% from May, reefer down 3%, and flatbed up 2%.

The national average van load-to-truck ratio was 2.6 compared to 2.5 in May and 3.9 a year ago in June 2022.

Spot Rates

DAT reports the flatbed spot rate was down 4 cents in June, but the refer and van rates increased 3 cents each. For the spot van rate, that was the first increase in five months.