For freight brokers who are moving contract freight, it’s been a pretty good year so far. The good times won’t last forever, so cheers to you and enjoy the ride while it lasts. For brokers who are living the spot market life, it’s been a bumpy ride.
For freight brokers competition is pivoting to price, rather than finding trucks like the past couple of years. If you’re relatively new to the industry and have only experienced a bull freight market, you’d better prepare for a long, cold winter of falling rates and excess truck capacity.
Pick your spots wisely and make sure you’re not selling on having the cheapest rates.
Volatility Returns to Freight Markets in 2022
Most freight brokers thought 2022 would be much like 2021. The bull market in trucking would continue with no end in sight. Imports would keep flowing into the ports, and consumers would keep binge shopping from their couches.
That wasn’t the case, though. Without warning, consumers ventured out into the world again, shifting their spending back to services and experiences. Shippers, still in panic-buying mode, were surprised by declining sales and excess inventory. This happened just as shippers negotiated new contracts bringing trucking rates up to par with spot rates to secure capacity.
This created a perfect storm for the bottom to fall out of the spot market. Rates fell 30% from their February highs as more freight stayed in the contract market. After two years of tight capacity, there are now too many trucks in the spot market chasing too few loads.
That all adds up to a simple observation: We are now in another freight recession.