The Shipper Truck Spot Rate Index shows that shippers across the U.S. paid an average of $2.25 per mile (including fuel) in April, down from an average of $3.01 in April 2022 and an average of $2.84 in April 2021.
According to Cargo Chief, DAT freight and Analytics and Loadsmart's analysis of the data, these rates reflect cargo owners in the spot market paid to transport dry truck cargo on more than 4000 lanes, but 2023 so far has not occurred a major truck bankruptcy.
the U.S. vehicle transportation rate continued to decline in April, the spot price in April fell 11 cents per mile from March, while the contract price fell 7 cents, and there is no sign of bottoming out for the time being. Mazen Danaf, an economist at Uber Freight, said there are not enough trucks to exit the market because shippers have withdrawn to transport their goods. Logistics companies believe that capacity oversupply must be reduced before the decline stops.
demand for trucks as of March was down about 1 to 2 percent from a year ago, while supply was about 6 to 7 percent higher than a year ago. Danaf said we saw a decline in net [truck] carriers for about seven months, for a total of about 120,000 carriers. However, this loss is far less than the approximately 120000 new transport vehicles added in the previous two years. Therefore, the trucking market is still oversupplied.
ITS Logistics Transportation Senior Vice President Manny McElroy said that during the peak period, the number of operators entering the market increased by 30%, but the current decline in operators is only single digits. Smaller operators were expected to exit the market and capacity would tighten at the end of the first quarter, but this simply did not happen.
Danaf said the number of operators will continue to shrink, but at a slower pace than they initially expected. A very slow loss process, rather than a sharp correction, we do not expect supply and demand in the second quarter to see a major structural change.
until truck supply and demand are more balanced, many industry analysts don't expect rates to rebound. Shippers fed up with the volatile spot market signed annual contracts for 2023, which achieved double-digit declines compared to 2022. Annual contracts typically include a fixed origin, a fixed destination and a predictable number of recurring shipments per week, allowing companies such as ITS Logistics to hire smaller carriers to operate dedicated routes.
McElroy said that unlike previous business downturns, the dedicated vehicle transportation business also allows small carriers to survive. Operators are locked in with ITS for the rest of the year and have daily work to keep them going, rather than relying entirely on temporary spot prices.
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