Hello Owner-Operators and Carriers,
We are nearly halfway through the month of October. Peak season is here, but it certainly doesn’t feel that way. That being said, there is always an angle in the trucking business that we can try to take advantage of to help drive our business forward.
1. Rates are underperforming past holiday seasons
The average total RPM for van freight including FSC is $2.46/mile, which is up $.01/mile from September. I think this will increase slightly over the next few weeks, but it is underperforming from what we normally expect during holiday season.
Here is how October 2022 compares with October 2021 so far.
October 2022 vs October 2021 Spot Rates
2. Rates will stay low, or lower, for the next 6 months
Many of you are asking what is happening in the market. When will it get back to $4.00/mile? When will the south start picking up? The key is understanding where we are in the cycle.
We are near bottom and will stay at or below current rates for the next six months. Starting Q2 2023, rates will begin moving back up, but not likely above 2022 summer levels – that may not happen until end of Q3 or Q4 2023. The key now is to lock in freight that will get us through the trough. Find dedicated lanes or work with us to help you find those contracts.
Q3 2022 Forecast: Spot vs Contracted Rates
3. Diesel prices will continue to drop
With the pending recession, we feel that diesel prices will continue to generally drop. Other variables may impact this. OPEC recently announced that they would be reducing production of output. If the Iran uprising and Russia and North Korea activities continue to escalate, this could affect diesel price as well. This market is influenced by many actors, but until we see further data to suggest otherwise, this is the best forecast we have right now. Stay tuned!
4. Spot rates continue to slide
Finally, let's look at the spread between contract and spot rates. Spot continued to decline from August to September, and contract rates are holding. That will soon change as contract rates fall and there is a convergence between spot and contract later in 2023.
Closing Remarks
In conclusion the market continues to shift. Being informed with actual data that is telling us what is happening in the market is imperative for the success of all of our businesses. The good news is trucking is cyclical. We are at or near bottom, and if history is any indication, we will start moving up in Q2 2023, albeit gradually.
Find ways to mitigate your risk soon. Lock into lanes sooner rather than later. Find out about our dedicated options or work with one of our full-service planners. Those aren't silver bullets, but they will help normalize your revenue and rate and take some of the burden off of your shoulders.
This is a great time to focus on cost. The market will begin shifting in 6 months, so let's get through this period and be prepared to take full advantage in Q2.
Thanks,
Jeff Resch
GM - Demand Generation
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Market Outlook and TrueNorth's Strategy
4 Ways to Survive a Slowing Market
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