Freight Market Shows Signs of Bottoming

January 24, 2023

The latest release of ACT’s For-Hire Trucking Index, show volumes and the supply-demand balance increased in December, while freight rates continue to decline.

The ACT For-Hire Trucking Index is a monthly survey of for-hire trucking service providers. ACT Research converts responses into diffusion indexes, where the neutral or flat activity level is 50.

Concerning volume, Tim Denoyer, Vice President & Senior Analyst at ACT Research, commented, “We’re now nine months into this freight volume soft patch with lower goods spending, overstocked retail inventories, and declining imports. The good news is that from a historical perspective, that means we’re closer to the end than the start.”

On rates, he noted, “Pricing power clearly shifted to shippers in 2022, but the recent stabilization hints the bottoming process is beginning.

Capacity continues to grow, with pent-up equipment demand still red hot, and freight demand is down, leaving the market balance loose near-term.”

On drivers, he added, “Our Driver Availability index remained at a cycle high of 57.7, reflecting medium and large fleets who act as safe havens in times like these. We also find the sharp slowdown in BLS trucking employment data interesting with regards to the industry at large.”

Denoyer concluded, “The supply/demand balance reading of 40.8 is better than its worst levels of recent months in the 37-38 range, signaling the freight cycle is starting to bottom. With capacity starting to slow and demand to recover eventually, the market should begin to rebalance in the not-too-distant future.”

ACT Research Freight Forecast provides analysis and forecasts for a broad range of U.S. freight measures, including the Cass Freight Index, Cass Truckload Linehaul Index, and DAT spot and contract rates by trailer type. The service provides monthly, quarterly, and annual predictions for the truckload, less-than-truckload, and intermodal markets over a two- to three-year time horizon, including capacity, volumes, and rates.

ACT’s full-year 2022 forecasts for DAT dry van and reefer spot rates, net fuel, were 93%-94% accurate on average for the 21-month forecast period, with our 2022 forecasts from Q2’21 (19-21 months out) 99.7% accurate for dry van and 98.5% for reefer. DAT dry van spot rates, net fuel, finished 2022 at $2.06 per mile, in line with our forecasts to the penny from 18 and 19 months out (June and July 2021).

The ACT Research Freight Forecast uses equipment capacity modeling and the firm’s industry economics expertise to provide unprecedented visibility for the future of freight rates, helping businesses in transportation and logistics management plan for the future with confidence.