Although truckload rates are trending downward, the latest release of the ACT Freight Forecast, U.S. Rate and Volume Outlook suggests that rates will not endlessly continue to decline.
“DAT dry van truckload spot rates are tracking toward $1.74 per mile, net fuel, in February, down from $1.83 in January, said Tim Denoyer, ACT Research's vice president.
"Against the prior-year period, dry van rates are down 34%, a cycle low, but we expect the declines to start to moderate from here as the bottoming process continues.”
Denoyer continued, “Further rate declines will accelerate the emerging capacity correction. Truck driving is a very tough job, so it won’t be too hard to convince people to find something else to do as the financial stress of these low spot rates grows. Just as the cure for high prices is high prices, the cure for low prices is low prices.”
Looking ahead in the freight cycle, Denoyer shared, “The bottoming process is ongoing, and layoff announcements by transportation companies have begun. It will take time, but we think labor attrition will begin this year and be key to a stronger rate environment in late 2023.”
He concluded, “The cycle-bottom phase features slowing capacity and thinning marginal capacity amid lower rates, preceding an early-cycle tight market. We think both the cycle-bottom and early-cycle phases are possible in 2023.”