The truckload spot freight market rates are at elevated levels not seen since early 2015, according to the DAT North American Freight Index
. And while the spot freight market saw record-setting highs in 2014, until recently demand for truckers in the spot freight market
has been down.
Why the Spot Freight Market Fell in 2015
Beginning in March 2015 and lasting until spring 2016, the spot freight market saw an unprecedented drop in the amount paid per load, according to the DAT Services North American Freight Index. This drop was driven in part by uncertainty in and the collapse of the oil industry with the end of fracking, mostly in the reduction in the amount of steel and other commodities moved by the nation’s trucking industry in relation to the oil boom created by fracking in the U.S. The drought in California also cut the large amount of food shipped from the state, reducing the number of loads available.
This reduced demand for truckers, combined with lower fuel prices, led to a decrease in the amount paid per spot freight load, according to TruckingInfo.com
. Another factor that played a big part in lessened demand for products was reduced consumer spending. All in all, the spot freight market saw a reduction in payout per load across all of its divisions, including flatbed, van, and reefer freight beginning in spring 2015
How the Spot Market Is Improving
In April 2016, retail sales surged by their largest amount since the same time last year. Slowly, but surely, the freight market has increased, along with consumer spending, over the spring and summer.
Also adding to this resurgence in the freight market are rising diesel prices and increased development in that industry as a result. Improvement in California drought conditions has also resulted in a marked increase in the amount of produce shipped from the state, leading to an increase of the number of loads on the spot freight market.
Common Problems in the Spot Freight Market
One of the main problems commonly associated with the spot freight market is the false sense of demand created when shippers flood multiple brokers on the market with lists of loads, many of them duplicated loads sent to each individual broker. This makes it seem like the market is being saturated with more loads than it actually is.
The new hours of service requirements instituted by the U.S. government beginning in 2012 also caused issues in the market. These new laws reduce the amount of availability on the part of drivers, leading to a shortage in drivers and higher rate demands from those drivers to cover their overhead within the reduced daily hours they have to work with.
How the Spot Market Is Expected to Fare Going Forward
Going forward, the truckload spot freight market still has some hurdles to cross to keep the growth it gained in 2016. This includes a weak manufacturing market, lower linehaul rates, and greater capacity added by larger fleets, which cuts into the amount of spot freight load availability for individual operators.
Overall, external forces, such as the reduction in fracking and the effect extreme weather events — such as the California drought — have on shipping are lessening. This has allowed spot freight market rates to improve. Whether they return to the record levels of 2014 remains to be seen.