According to leading analysts, the truck market has bottomed out

A leading blue-chip market data firm sounded the alarm in a report on Friday that spot rates in the trucking industry are falling well below costs.

ACT Research released a 56-page report on lower freight costs, partly accelerated by slowing demand for durable goods. Those lower rates will be a “growing deflationary force in 2023,” said Tim Denoyer, vice president and principal analyst at ACT Research, in a press release.

“As we lower forecasts for truckload rates to supply factors, we believe the bottoming process is beginning as spot rates are now further below costs than ever,” Denoyer said.

Compared to 2021, diesel was 44% higher in the month of October, according to the Department of Energy. This is the biggest contributor to rising costs for truck fleets. According to a July report by Truckstop.com, the cost of parts and maintenance for trucks starting in 2021 has also increased.

According to the FreightWaves National Truckload Index, spot rates are down 23% year over year.

Spot rates have plummeted over the past year. (FreightWaves SONAR)

“It won’t be long before none of us little guys can exist,” said Steve Berg, a truck driver from Chino Hills, California. “Everything has doubled in price as prices collapse.”

In fact, Berg said he will close his agency next month, having owned and operated it since 2012.

“Big purge” is becoming increasingly likely for small trucking companies

This poses a challenge for small fleets and owners in the trucking industry. Spot rates saw a sharp decline earlier this year amid rising fuel costs.

Chris Tucker, owner of Winchester, Kentucky, trucking brokerage broker Full Coverage Freight, predicted in June that the trucking industry was about to experience a “big purge” of small hauliers. That means a massive wave of bankruptcies among owners and operators – many of whom set up their trucking companies during the red-hot freight market of 2020-21.

FTR Transportation Intelligence, another leading trucking intelligence firm, forecast in its latest Trucking Conditions Index report that adverse market conditions will persist through much of 2023. The index has been negative for all but one month since February 2022.

“Haulers who have run their businesses well in good times should remain healthy and outperform those who have relied on a resilient market to stay afloat,” said Avery Vise, FTR vice president of trucking, in a press release.

Do you work for or own a trucking company? Share your experiences of 2022 [email protected].

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