Q3 2023 Trucking & Freight Brokerage Outlook
Because of decreases in durable goods shipments compared with 2020 through 2022, freight costs have declined significantly but have flattened out, so contract pricing is near to spot pricing. While shippers and transportation professionals can breathe a sigh of relief, this may only last for the next 6-12 months.
Other recent developments and their potential impact on the third quarter of this year and beyond are noted below.
Carriers Supplementing Their Fleets
- Many large carriers use independent owner-operators to move freight
- There’s still a driver shortage but a lot of independent drivers are now driving for someone else
- When this occurs, the carrier is acting like a trucking broker without their customers knowing – even those who use carriers because they think they only use their own fleet
- Carrier customers may think they have volume and trailers locked in and know the drivers but this may not be the case
- Trucking brokers use both carriers and independent owner-operators and can be more cost-effective than carriers outsourcing loads especially as they can flex up and down based on your freight volume
Spot Rates Leveling Out
- LiVe Logistics has seen some flattening/leveling of spot prices
- Spot rates won’t start going up until the stop going down
- A lot of customers leaning into spot market, which is best if you can provide a 48-hour notice)
- If you have repeat volume/lanes or may need to schedule freight within 48 hours, contract pricing may cost less
- It’s time to start thinking about contracting sensitive/high risk lanes instead of continuing to rely on cheap spot rates
- We expect to see less backhaul opportunities as well
- There is less of a difference between capacity and what being shipped
- Don’t be surprised if you get caught off guard, especially if UPS goes on strike
Unrest, Parcel Overflow & Increasing Freight Prices
- Less-than-truckload (LTL) is filling up more trucks, delaying shipments
- Teamsters are looking to strike
- If UPS drivers go on strike, will shift volume to FedEx, DHL, USPS – but there isn’t enough capacity there
- Overflow capacity likely shift to LTL, which will lead to increased spot and contract rates
- Parcel carriers may have to turn to full truckloads
- Some shipments may need to be sent via pallet and full truckload even if you can’t fill the truck