When will the spot market bottom out? Soon, says the poll

When your business thrives on high spot rates, there is both good news and bad news. The bad news is that these rates have not bottomed out yet. The good news is that they will likely do so in the next three to six months and then start to rise again in the second half of 2023.

At least that’s the most widely held view of the nearly 400 shippers and brokers/3PLs polled by FreightWaves Research last week. When asked when spot prices would bottom in the current cycle, 44.05% answered Q1 2023 and another 25.57% answered Q2 2023. Only 13.42% thought the bottom would come in Q3 or later.

[Source: FreightWaves Research]

Spot rates have already bottomed out, said 16.96% of respondents, or about one in six. It’s possible rates are picking up again for their companies, but FreightWaves’ National Truckload Index (NTI.USA) — a seven-day moving average of spot rates — has continued to fall since the survey was first emailed out. The index traded at around $2.58 on Nov. 7 and is currently around $2.54.

Additionally, NTIF.USA, a 30-day forecast based on historical rates, imports, wholesale fuel prices and contract rate data, forecasts NTI.USA to be around $2.45 by mid-December.

That means transport companies aren’t out of the woods just yet. But maybe they’re seeing rays of sunshine now.

[Source: FreightWaves Research]

There is consensus that rates will reverse once we get beyond the first half of 2023. Look at the trend emerging from the top three answers for where respondents thought interest rates would be at the beginning of each of the following quarters.

Q2 2023 (now 6 months)

  1. 10-19% lower (21.27%)
  2. 1-9% lower (19.75%)
  3. About the same (18.99%)

Q4 2023 (12 months from now)

  1. 1-9% higher (22.53%)
  2. About the same (21.03%)
  3. 10-19% higher (15.95%)

Q2 2024 (18 months from now)

  1. 1-9% higher (24.30%)
  2. 10-19% higher (21.01%)
  3. About the same (14.43%)

Analyzing the results for this question using weighted averages, where 7 means about the same, you see scores of 5.95 for Q2 2023 (1%-9% down), 7.14 for Q4 2023 (about the same) and 7.81 for Q2 2024 (1%-9% higher).

A difficult time for freight forwarders

[Source: SONAR NTI.USA chart, with NTIL.USA and DTS.USA]

Many airlines have been hit by high fuel prices and equipment costs in 2022. They also had to contend with inflationary pressures, which depressed consumer and industrial demand. They have been forced to deal with falling spot rates, which now threaten to drag contract rates lower for the foreseeable future.

[Source: FreightWaves Q4 2022 Shipper Rate Report, US Bank]

For most of this year, spot market tendering for freight has been dramatically cheaper than contracted freight, but that reality won’t stay that way forever. The spread will naturally narrow as contract rates are bid lower to better reflect the spot market. The share of contract freight and compliance should decrease. When this happens, more freight is shifted to the spot market, changing the balance between load volume and truck capacity.

[Source: SONAR RATES.USA baseline chart]

Q4 2022 shows the freight market in an interesting place. As peak season approaches (or not), so does the bottom for the airlines’ market disadvantage. It remains uncertain what type of seasonal volume and denial data will be seen from holiday consumption, if any.

Currently, the Outbound Tender Reject Index on FreightWaves’ (OTRI.USA) SONAR is hovering exactly around 4% as volume (OVTI.USA) continues to decline with it. That 4% rejection rate is lower than it was at this point in 2019 — the last real down year for airlines — and most analysts believe this peak season will do little to level the market in any meaningful way.

[Source: SONAR OTRI.USA in full year view]

A little more information about freight forwarders and brokers

[Source: FreightWaves Research]

Every fleet size we surveyed chose Q1 2023 as the most common expectation for spot bottom prices, except for those with 250-999 tractors. The most common answer for this group was Q2 2023.


The broker trend indicated a little more different opinions depending on the size of the company. Like the carriers, most brokers believe the bottom will come in the first quarter of 2023. But something interesting happens when brokerage firm gross income rises: Respondents become more likely to believe the bottom will come in the second quarter.

If there’s a credible explanation for this, it could be that large brokerage firms tend to be less exposed to the cash market and therefore less exposed to the challenges that smaller brokerages are already facing.

Would you like to see this data before everyone else?

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