While spot and contract rates offer shippers different value, more shippers are leaning toward contract rates in today’s market. As the spot market cools, Avery Vise, vice president of trucking at FTR, believes that freight demand is still stable and the need for trucking services remains solid.
“We saw the spot market reach unprecedented levels at the end of last year, and they spent the first four months of the year steadily coming back down. Rates and volumes are still above the five-year average, so we have hardly normalized at this point but we are headed in that direction,” Vise said.
Vise stated that volumes are coming down in the spot market but not overall and that this can be linked to what is happening with employment rates.
Hiring is typically an indicator of the contract segment because of the way it is tracked, he added. One-truck operations do not typically show up in payroll employment numbers. They are instead tracked separately through things such as new carriers, using FMCSA data, and are only tracked quarterly by the Bureau of Labor Statistics.
“In today’s market, we really see a shift from spot to contract through these spot metrics, strong overall freight and job growth,” Vise said.
FTR specializes in forecasting and market analysis for the transportation sector and is a leader in the industry for transportation intelligence. The company forecasts items such as rates, capacity and commercial truck production.
Despite driver and labor shortage reports, Vise believes that there is a growing number of drivers given that the trucking industry has grown rapidly since the COVID-19 pandemic.
“When we look at the market, we aren’t looking at it from the perspective of a small, medium or large truck carrier. We are looking at it from the perspective of overall driver capacity in the market,” he added. “I still believe that individual carriers are having trouble getting drivers and filling trucks, but my assessment is that we have somewhere around 14%-16% more drivers today than we had pre-pandemic in the for-hire segment, with numbers being closer to 12% if we include private segments.”
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