Dive Summary:
- The trucking market has bottomed out, according to several speakers at the Mid-America Trucking Show in Louisville, Kentucky, on Thursday.
- Owner-operator Chad Boblett said he believes the spot market has bottomed out, citing communication he’s had with brokerage giant CH Robinson.
- “We’re definitely at the bottom,” DAT principal analyst Dean Croke also said, discussing how contracts and spot rates are starting to rise again. However, he noted that like last year, the market could still be tough for trucking businesses.
Dive Insight:
The industry has been struggling for 18 months, but that could remain so and improvements are slow, Croke told an audience on the ProTalks Stage at the Kentucky Exposition Center in Louisville.
“It’s a bit like what we were saying last year, which is, ‘Hold on tight because it’s going to be a pretty tough ride for the rest of this year,'” Croke said.
He added that the bottom could last longer than expected, with demand struggling and not getting an immediate boost in the next six months.
The extended bottom means shippers still have pricing power, according to Croke. As Werner CEO and President Derek Leathers noted in a 4th quarter earnings call in February, some shippers are still looking for one last bite of the apple, taking advantage of low prices.
“Contract rates have been falling 12 to 15 percent every month for most of the past year,” Croke said, noting that rates appear to be leveling off.
Meanwhile, spot rates, which had leveled off, are slowly starting to rise again, he said.
Despite the move in interest rates, Croke warned against expecting a quick recovery. The process is slow and unlike any other market he has seen, he said.
Other industry analysts have previously shared similar sentiments about the improving market and noted optimism.
University of Michigan professor Jason Miller said this a LinkedIn post earlier this week that he sees little chance of interest rate cuts heading into 2024, an observation based on producer price index data.
He added that “it looks like we’re at the bottom of the pricing cycle in the HGV segment, while we’ve passed the nadir in the LTL segment.”