When will the cash market bottom?  Soon, according to a survey

When will the cash market bottom? Soon, according to a survey

If your business thrives when spot rates are high, there is both good news and bad news. The bad news is that these rates have not found a bottom yet. The good news is that they will likely do so in the next three to six months, then start climbing again in the second half of 2023.

At least that’s the most widely held view among the nearly 400 carriers and brokers/3PLs surveyed by FreightWaves Research last week. When asked when spot rates will bottom out in the current cycle, 44.05% answered in the first quarter of 2023, and a further 25.57% answered in the second quarter of 2023. Only 13.42% thought that the trough would occur in the third quarter or later.

[Source: FreightWaves Research]

Spot rates have already bottomed out, said 16.96% of respondents, or about one in six. It’s possible that rates have started to climb again for their businesses, but FreightWaves’ National Truck Loading Index (NTI.USA) – a seven-day moving average of spot rates – has continued to fall since the survey was sent for the first time by e-mail. The index recorded around $2.58 on Nov. 7 and currently sits at around $2.54.

Additionally, NTIF.USA, a 30-day forecast based on historical rates, imports, wholesale fuel prices, and contract rate data, predicts NTI.USA to trade around $2.45 at the end of the day. mid-December.

This means that carriers are not out of the woods yet. But they could now see glimmers of sunlight.

[Source: FreightWaves Research]

There is consensus that rates will recover once we pass the first half of 2023. See the trend shown from the top three answers for where respondents thought rates would be at the start of each of the following quarters.

Q2 2023 (6 months from now)

  1. 10 to 19% less (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%)

If you analyze the results for this question using weighted averages, where 7 equals “About the same,” you get scores of 5.95 for Q2 2023 (1% to 9% lower), 7.14 for Q4 2023 (about the same) and 7.81 for Q2 2024 (1% to 9% more).

A difficult time for carriers

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

Many carriers have been battered by high fuel prices and equipment costs in 2022. They have also had to deal with inflationary pressures that are dragging down consumer and industry demand. They have been forced to navigate falling spot rates which now threaten to lower contract rates for the foreseeable future.

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

For most of this year, spot market freight tenders have been considerably cheaper than contract freight, but that reality won’t last forever. The spread will naturally begin to narrow as contract rates are lower to better reflect the spot market. The percentage of contractual and compliance freight should decrease. If this starts to happen, more freight will be moved to the spot market, changing the balance between load volumes and truck capacity.

[Source: SONAR RATES.USA baseline chart]

The fourth quarter of 2022 shows the freight market in an interesting place. As peak season approaches (or does not approach), so does the market disadvantage of carriers. It remains unclear what kind of seasonal bump volume and release data will see holiday consumption, if any.

Currently, the FreightWaves (OTRI.USA) SONAR Outbound Tender Rejection Index hovers around 4% as volume (OVTI.USA) continues to decline with it. That 4% rejection rate is lower than 2019 — the last real down year for carriers — and most analysts believe this peak season won’t do much to balance the market significantly.

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

A little more info on carriers and brokers

[Source: FreightWaves Research]

All of the fleet sizes we surveyed chose the first quarter of 2023 as the most common expectation for the lowest spot rates, except those with between 250 and 999 tractors. The most common answer for this group was Q2 2023.


The pattern of brokers was slightly more suggestive of differing opinions by company size. Like carriers, most brokers believe the bottom will hit the first quarter of 2023. But something interesting is happening as brokers’ gross revenues increase: Respondents become more likely to think the bottom is approaching in the second quarter. trimester.

If there is a believable explanation for this, it may be that larger brokerages tend to have less exposure to the spot market and therefore may be less in touch with the challenges that smaller brokerages already face. .

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