Ryan: Welcome to the April edition of the C.H. Robinson Edge video. I'm Ryan Hammett, joined as always by Mat Leo to talk through the developments in the freight market that are impactful to you. And Mat, I'm going to be a little honest, if the last few months were a ride, I'd kind of like to get off at the next stop and maybe just walk for a little bit.

Mat: I get that, but I think the market has other things in mind.

Ryan: True. So today we're going to focus on one big question we've been getting nonstop.

Are the U.S. truckload market conditions we've seen over the last four to five months structural or are they transitory? And then I think we'll talk about what different shippers should do with that answer, why April is actually a solid planning window and what's still happening globally and across other modes and services.

Mat: And I'll say this now about April. The theme is calmer, but not necessarily cheaper.

Ryan: Yeah, less volatility, same higher cost than experienced the last few years. All right, Mat, what do you think? Structural or transitory? Because some people are treating this like winter chaos, while others think this is the new baseline.

Mat: Yeah, we do see this as structural, but not in the traditional demand-driven sense. And I think that's what's important. This is a supply-driven structural shift. Capacity has tightened, operating costs have risen and the market just has less elasticity than it used to. And that's why cost moved up during what really should have been a quieter period.

Ryan: So demand didn't explode, but the market still changed, right?

Mat: And I think that is what's causing such a variety of different perspectives in people's minds and how they should think about the current market. Because many of them are not seeing this increase in freight demand.

So they're thinking, why the change? And basically, the carrier baseline is smaller, more disciplined and more selective. And when disruptions happen, think of weather, compliance, fuel, peak seasonality, et cetera, it has a bigger impact because there's just less slack in the system.

And currently where we're seeing that to be the most pronounced is in Texas and California.

Ryan: Good old California. It always finds a way to be California. But out there in the West, outbound demand is elevated relative to the truck supply and diesel prices are running roughly 40% above the national average.

So the carrier costs per mile overall are materially higher, which is making it more challenging to find long haul carriers willing to take freight there.

I think what we're seeing in Texas is currently driven less by demand. And while produce season is coming, it's less than demand that California is seeing and more by enforcement intensity and compliance activity, which lengthens turn times and reduces the effective capacity.

And I want to add one more thing about demand. If you look at our updated truckload rate forecast in our April report, you'll see that we're not assuming a material improvement in freight volumes in the second half of the year outside of normal seasonality.

And I do think that's what's influencing these three shipper mindsets that are emerging. Those that are planning as if the market has shifted despite mixed demand signals, those that are waiting to see what happens and a third group, those that think the last few months have been a temporary experience. Mat, would you mind walking us through all three of those?

Mat: Yeah, sure. So the first group, you know, shippers acknowledging reality. You know, they've adjusted budgets, re-engaged providers and accepted that seasonal relief may be weaker. For them, it's about refining execution and planning ahead.

This group is really, they're doing some hard but really necessary work right now. The second group is kind of more of that wait and see. And they're not denying the environment by any means, but they just don't overreact and make any significant or potentially unnecessary changes. And for them, April is about validating assumptions, watching tender acceptance, route guide performance and carrier behaviour and the market will reveal its true self.

The third group is a, this is just a blip, right? And they're betting on relief showing up soon. And the risk isn't in that belief itself, Ryan. It's in the operational exposure. And think of it, if you plan for rates to fall quickly and they don't, those costs show up as service failures and premium spend later on and especially as these seasonal events hit.

Ryan: That's the key takeaway for me. Being wrong on the market, it's not a theoretical concept. It shows up on Monday morning when the trucks don't show up. So let's talk cost. The volatility may have calmed down a bit for both fuel and line haul, but we're not really seeing a real reprieve so far.

Mat: Exactly. The swings have narrowed, but the level is higher. I would say truckload cost really reset upwards and traditional seasonal relief isn't as reliable any more because of that supply side has structurally changed, as we mentioned.

Ryan: And fuel is still very much a part of that conversation.

Mat: Oh, yes. Fuel remains a critical cost component to monitor. And even when it's treated as a macro level on contractual freight as a pass-through, volatility still hits carriers through deadhead and repositioning and timing gaps between surcharge paid and actual fuel price paid at the pump. And that behaviour ultimately flows into pricing and service decisions.

Ryan: Which brings us now to procurement. We're hearing from shippers thinking about delaying plan bids, hoping that some cost relief is coming. Mat, what is your guidance if someone is considering that?

Mat: I would say just be careful. Delaying procurement can look reasonable on paper, but it can create real exposure in execution. And providers may be continuing to honour rates, assuming that a price reset is coming. And when that reset gets delayed, then acceptance typically suffers.

And we've researched this with a few several different universities and the so what from procurement research is simple, rates lose alignment over time, routeing guides erode quietly as that misalignment occurs and predictable procurement cycles, like I mentioned, they reduce variability and protect service. So, you know, waiting too long doesn't usually save money. It actually introduces risk.

Ryan: So you're saying that predictable rebids aren't just some administrative exercise. They're actually necessary cost and network alignment. So carriers know what they're being asked to hold and for how long. That certainty really supports their planning. So extending the period between bids can increase the odds they become selective, particularly in a tightening market.

So based on that, the takeaway is chasing short-term relief by delaying bids can end up backfiring in the long-term, especially when the market's tight.

Mat: Yeah, it's the light at the end of the tunnel and then when that light goes off, what goes out the door. In my experience is that realism and predictability matter more than trying to, quote, time the market specifically perfect.

Ryan: Let's make this practical right now today. Why is April such an important window?

Mat: Yeah, April is unique because it sits really in between what we would consider like disruption cycles. Winter impacts have faded, knock on wood, but the next stack of seasonality just hasn't hit yet. Think of events like Mother's Day floral in May, primarily the reefer and road check week that immediately follows. And then you have produce season, peak beverage season. And once those start, the market really just gets less forgiving.

Ryan: Yeah and you brought up Road Check. So quick reminder that Road Check Week is May 12th to 14th this year. Historically, we've seen that Road Check Week alone can create problems when capacity is already tight and we expect it could have an even larger impact this year.

Mat: Yes, exactly. And this chart here shows the typical market tightness that comes from Road Check Week each year over the past 15 years.

And because there are so many years included in here, don't focus too much on the numbers themselves, but rather the change that occurs during that blitz.

The load to truck ratios, they average an increase of over 50% compared to that baseline period just before it. And when you layer this co-ordinated compliance event on top of other current compliance enforcement and also in a market with less slack, disruption hits harder and lasts longer.

So that's why April matters. It's a month to regroup and do the unsexy stuff. Things like pressure test your routeing guides, confirm carrier commitments and pre-confirm volume expectations, align those procurement timelines and ultimately build lead time into those May and June movements.

Ryan: And we should probably take a moment to call out refrigerated trucking specifically here.

Mat: Yeah, I mentioned Mother's Day flowers, but this year, produce season is arriving slightly differently with volumes compressing into a shorter window. And that increases competition for capacity just as those broader seasonal demand stacks begin, really.

Ryan: So April isn't really quiet time. It's more get ready time, right? And up until now, we've been focused primarily on, in our conversation here on the U.S. truckload market, because that's the mode experiencing the largest shift. But we also know that the truckload market does have trickle down impacts on other modes. So what's the expected impact across other transportation modes right now?

Mat: Yeah, I think that the two biggest recipients of downstream impact are going to be intermodal and LTL. And from an intermodal perspective, some shippers have begun to shift that freight into this mode as a way to hedge against the increased truckload cost. And this makes even more sense for those long haul deliveries, right?

And really from an LTL perspective, we've researched or sponsored some research projects on this with MIT and it proves that during times of tension in the truckload market, a conversion of freight to LTL market occurs. And this is likely those appropriately sized freight that's sitting in that bubble between too big for LTL and maybe too small for truckload. So as those truckload costs fluctuates, higher or lower, this freight just moves through the path of least resistance or cost in this case.

So we may still be in the early stages of this, but as truckload rates firm, keep a lookout for potentially increased pressure in that LTL space due to this extra demand.

Ryan: And one quick final note on the international side, we haven't forgotten about everything that's going on there. It is not without its challenges right now.

Conditions may look somewhat stable at a headline level, but the operating environment is tighter. We've got extended routings due to multiple disruptions, capacity management and of course, fuel costs are really driving variability, even where base rates appear steady.

Mat: Yeah, fuel remains a major factor in both ocean and air. Longer routings, increased consumption and surcharges are becoming a larger share of that total land of cost. And that means shorter pricing windows and less predictability.

And in the air market, schedules have normalised post-holiday and the initial days of the Iran conflict, but routeing constraints and fuel costs continue to limit flexibility. I'd say reliability and planning buffers matter more than speed right now.

Ryan: Well, the so what is this: Even if base rates look calm, total cost and execution risk still requires active management, which brings us to the bigger picture for April with this takeaway. The international and domestic markets may look calmer now than February and March, but it's operating with less margin for error.

Supply side tightening is real, costs are remaining elevated and the next wave of seasonality is coming. For domestic freight, it's coming in May and for international freight, it's coming this summer.

Mat: Yeah and if you're accepting that reality, keep leaning into that. And if you're waiting and watching, I'd say use April to make decisions with data. And if you're expecting this to fade quickly, just be mindful of where those risks show up and when it doesn't.

And as always, partner with your C.H. Robinson team to pressure test assumptions, you know, procurement timing, capacity strategies. C.H. Robinson brings you the edge you need to be successful to manage your global transportation strategy. Thanks for watching. We'll see you next month.