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truckload freight market trends

Truckload Freight Market Trends 2023: What to Expect

Nathan McGuire
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December 15, 2022
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Truckload Freight Market Trends 2023: What to Expect
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In the past two years, logistics companies have weathered heavy turbulence from the uncertainties and persistent problems plaguing the freight market. Aside from the tripledemic of coronavirus, flu, and RSV, shippers and transportation providers have had to overcome high diesel prices, U.S. economic inflation, and an ongoing truck shortage. These factors have undermined the health of supply chains everywhere and have made most people anxious about what the future holds for the freight marketplace as we head into the end of Q4 and a new year of uncertainties.

This article will forecast the freight market trends for 2023. It will briefly recap the 2022 truckload market before offering Wicker Park Logistics’s forecast for volume tenders, the spot and contract marketplace, and offer advice for shippers to help streamline their supply chain heading into Q1 and beyond.

A Look Back at the 2022 Truckload Market

2022 has been a challenging year for many carriers throughout the logistics industry. Small and large companies alike have shuttered their doors due to lagging retail sales and a general reduction in truck volume compared to pre-pandemic levels. 

These trends have resulted in tighter competition among freight carriers, and a race to the bottom for truck profit margins. Diesel prices remained high throughout the year, adding to the general squeeze many carriers faced when deciding which loads to accept. Additionally, the overall economic conditions in the U.S. have not helped. 

As U.S. consumers tighten their belts amidst the national inflation, other retail market trends have seen a general slowdown in volume, such as in food and used cars, showing that the slowdown is affecting many industries at once.

A Technological Turn

As a means to evolve and stay ahead of the competition, many logistics companies have utilized technologies to help shippers optimize their supply chains. Providing value-added services such as tracking and tracing, GPS monitoring, and route optimization has helped transportation service providers weather the unpredictable market forces of the past year. 

Some companies, such as Wicker Park Logistics, offer data analytics that provide insight into things such as the outbound tender volume index (OTVI) and outbound tender rejection rate index (OTRI). The OTRI, which measures the percentage of truckload shipments rejected by carriers, has fallen to a near low, indicating a softening market and fewer loads for carriers to choose from. This data, as well as the contract versus spot freight index, helps shippers forecast carrier capacity and specific lanes, the current freight market rates and trends, and access to a full suite of powerful analytics tools.

The focus on technology has also been propelled by the consumer’s growing preference for e-commerce as the preferred method for obtaining retail goods. The logistics industry has responded by evolving its services to support middle-mile, final-mile, and parcel deliveries. It has also resulted in trucking companies adopting tech stacks such as TMS Enabled Visibility, Open API, and tracking and tracing programs that allow shippers to connect through an online portal. These technologies enable shippers to gain more visibility into their shipments and optimize their supply chain to ensure on-time deliveries.

2023 Truckload Market Trends

According to a recent FreightWaves survey of 400 carriers and brokers asked when spot rates would hit bottom, over 44% predicted Q1 2023, while another 25% said Q2. This news spotlights gloomy prospects for the beginning of next year, as most logistics managers view the current economic trends of 2022 will persist. Many carrier groups’ profitability depends directly on a healthy spot market. With retail trends declining and Q1 historically offering fewer load tenders throughout the logistics industry, carriers will likely continue to feel the pinch for the first half of next year. 

What does this translate to shippers and brokers? The more carriers competing for dwindling retail volume empowers shippers. More transportation options for available loads will probably mean lower overall freight rates as brokers and carriers alike reduce their profit margins to keep their trucks moving. An economic downturn in freight volume makes it harder for brokers to expand beyond their current customer base. Shippers usually fall back on their regular service partners and hesitate to onboard new providers when business is slow.

We suggest that many companies will likely attempt to maintain their current book of business, improve service and expand their network capacity. Brokers can use this time to reprice lanes, procure more freight options, and find carriers willing to drive more miles.  

Spot vs. Contract Rate Expectations

The precipitous decline in truckload spot rates in 2022 does not necessarily mean that contracted rates will see similar decreases. In fact, contract rates will likely see a slight increase in rates. Generally less volatile than the spot rate market, contract rates often bake a bit more margin into the costs to help carriers through a longer term, usually a year or quarter. The global pandemic, economic inflation, and high prices at the fuel pump are also factors that go into contracted rates as carriers look to offset these adverse effects on their take-home pay.

However, these added constraints also create conditions where transportation providers simply cannot meet their contractual obligations. The result is opportunities for new carriers to participate in freight mini-bids, the special request for pricing on a set of specific lanes where a shipper is likely struggling.

We see the potential of major retailers and global shippers moving toward mini-bids as a solution to overcome some of the struggles they encountered through 2022. For example, when current providers cannot run their lanes profitably and can no longer fulfill their contractual obligations, a mini-bid is a chance for shippers to find more competitive rate quotes, better service, and more dependable transportation partners to shore up some of the challenges to their supply chain.

Wicker Park Logistics Predictions for 2023

To recap, some of the current challenges shippers face in 2022 will likely continue moving into Q1 2023. Following the peak shipping season and the consumer spending sprees of Thanksgiving, Black Friday, and Christmas, consumers generally spend less money on excessive goods following the New Year’s holiday.

Q1 will probably see declining spot rates as volume tenders continue falling and carriers compete for fewer offered loads. Generally, this time of year is when shippers extend their RFPs to lock in transportation providers when the market is less volatile and more advantageous to shippers.

We sense that current market conditions combined with the uncertain forecast for the U.S. economy mean that the logistics industry will likely experience many of the same challenges going into 2023.

Head into 2023 with More Visibility on your Supply Chain

In 2022, shippers sought technological solutions to help overcome some of the unique challenges they faced in making their supply chains operate smoothly throughout the year. The right tech stacks enable shippers to gain real-time visibility into their operations by combining data analytics and customizable API that directly connects with their existing software.

Many shippers lean on Wicker Park Logistics as their transportation provider because we combine best-in-class technology and a dense carrier network to offer customers competitive pricing and on-time service. We have decades of experience offering a consultative approach to shipping that helps customers overcome some of their unique challenges in their supply chain. Whether or not your company has struggled in 2022, we are ready to help. Call Wicker Park Logistics today!

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