North American Freight Market Insights

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Transportation Market Overview and Freight Trends

TOP STORY: Trucking shows signs of an oversupplied market

The truckload market has been well balanced and leaning to oversupplied for several months. In fact, the dry van spot market has held close to the five-year average of load to truck ratio (LTR) during this time. The indicators suggest the market is oversupplied—or will be near term.

See the market cycle graphic below highlighting the transition to an oversupplied market. This means there is enough available capacity that market pressure has largely abated.

market cycle over supplied

Source: Image by C.H. Robinson based on concept originally narrated by ACT Research


Many in the industry want to know when the market shifted. However, picking a precise date is more nuanced than that. It requires a blend of art and science. A key challenge in making the determination is that regional, corridor, and shipper experiences vary. That varied reality rolls up to the average national experience.

The following may help explain the nuances involved in determining the current market state.

Indicators supporting our oversupplied state


Class 8 tractor fleet expanded 4% year over year
ACT research continues to increase their estimation of fleet growth across private and for-hire fleets each month. Their forecast from November 14, 2022, showed a 4% forecasted growth for 2022 year over year (Y/Y) and 2023 forecast at another 1.5%. The 2023 forecast is less certain as carriers may discern exposure with too much additional capacity if the economy is further challenged.

Trucking labor shifting away from owner-operators
Since Q2 2022, owner-operator capacity has diminished while employee-based and independent contractor capacity has increased. There have been more voluntary revocations of operating authority at the same time as the Bureau of Labor Statistics (BLS) reported trucking job growth (through October). These factors suggest self-employed truck drivers are seeking the shelter of employee-based carriers.

Owner-operators are faced with much compressed spot market pricing, continued elevated diesel costs, and fewer loads in the spot market. The October BTS and BLS jobs report amended their trucking jobs loss in September with a growth figure in both September and October. Year to date trucking jobs have increased about 55,400 for ~3.5%.

Spot market LTR is down
According to DAT, LTR levels for the dry van spot market have been below the five-year average since mid-October. While 2022 has had stretches of low LTR last this long (and longer) with corrections slightly above the five-year average, conventional wisdom in the market is settling on the idea of LTR remaining slightly below the average for some more weeks to come.

Contract market demonstrates ample capacity
Truckload route guides are performing at pre-pandemic levels. First tender acceptance and route guide depth both demonstrate ample capacity. See the contract truckload section below for more details.

Close to reaching the threshold of cost per mile to operate a truck
According to the C.H. Robinson forecast for 2023 cost to operate a truck per mile, which is based on ATRI’s 2021 research, we’re not there yet. The threshold of market cost per mile intersecting with operations cost per mile has historically been the market bottom for spot market pricing. This is the next key indicator to the oversupplied phase of the truckload market. See the spot market dry van forecast for more details about when this might happen.


Truckload freight volume forecasts are mixed for 2023


Freight volume growth
Analyst views range from around -4% to 1% freight volume growth forecasts in 2023.

  • Manufacturing: The Purchasing Managers Index from the Institute of Supply Management (ISM-PMI) shows manufacturing continues to grow, although at a decelerating pace currently at 50.2 with 50 being the growth threshold.
  • Retail: Shows the pressures of the economic environment but continues to have a lot of inventory to move around, whether to better position within the supply chain or sell to a wholesaler or reseller. Either way, it contributes to freight volumes.
    • Additionally: The National Retail Foundation forecasts a 6–8% increase annually for holiday sales with the observation that consumers are "taking things a bit more thoughtfully and cautiously…but continue to spend on household priorities."
  • Housing: With new construction slowing, housing is underperforming compared to retail and manufacturing.

Active fleet utilization forecast suggests the bottom of the market is the 10-year average
FTR continues to publish a monthly estimate of how well the U.S. truckload fleet is utilized. Their 2023 forecast suggests a utilization at the 10-year average. If correct, this forecast suggests participants in the freight market can expect a healthy market with available capacity, but not one grossly oversupplied.

To sum up, despite the variance in freight volume forecasts and possible amendments to the capacity expansion forecasts, it seems reasonable the truckload market has shifted into oversupplied for these reasons:

  • Spot market load to truck ratios are trending below five-year averages for roughly a month
  • Contract route guides are performing at top levels of performance
  • Class 8 tractor fleets are expanding faster than freight volumes
  • Labor and capacity are migrating between owner-operators and employee-based fleets

The coming year will introduce the period where carriers take stock of the market. They will discern if it is more prudent to slow or push off new equipment purchases for some months. They will likely consider replacement only versus incremental growth as well as net contraction of their fleets.

When the spot market cost per mile is at the point of estimated average operating cost per mile, the market has found its cost per mile bottom and will hover there until supply and demand balance once again and bring some pricing power back to the carrier community, at which time the market starts to move toward the upcycle.

Recommendations for this period in the market cycle

  • Start preparing your strategy for the next cycle shift. Now is an exceptional time to get a jump on developing transportation strategies for the upcycle.
  • Maintain efforts to deliver positive driver experiences. Find ways to differentiate at both origins and destinations. Labor, while improved, is still a/the primary focus for carriers. Driver experiences do and will matter when it comes to capacity and price paid.

Connect with your C.H. Robinson team to engage with capacity strategies that are aligned with the attributes of your freight profile and business processes.

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Full Truckload Shipping

TOP STORY: Capacity availability is resulting in high performance for Spot and Contract markets

As the truckload market sits in an oversupplied state, now is an outstanding time to revisit truckload strategies. Revisit your approach now to enable the best experience in today’s market and the forthcoming upcycle.

Use the following information related to both the spot and contract markets to review and enhance your current strategies.

Consider how the spot and contract markets interplay. Recent research sponsored by C.H. Robinson with MIT's Center for Transportation and Logistics (MIT-CTL) found that hierarchical route guides for awarded truckload freight tend to have limitations based on market condition.

In very tight markets, the route guides break down at the fourth backup carrier with the subsequent tenders largely rejected and eventually the tender is covered in the spot market. In a loose market like today, rejected first tenders are typically covered by the second carrier. Consider a digitally enabled spot market strategy between the second and fourth backup provider.

Previous research shows the true cost of route guide erosion, failure, and reliance on the spot market. Luckily, today's digitally enabled spot market strategies can lace the spot market into your route guide. This means lower operations costs, faster access to the spot market, and reduced shipping rates. Work with your C.H. Robinson account manager for strategies that enable the best performing route guides and access to the spot market.

Spot market, committed market, and capacity insights

The truckload spot market is generally considered to be 15–20% of the for-hire trucking market. Today’s market cycle position has most analysts suggesting the spot market total volume has moved back to the 15% range of the market due to the capacity available to the contract market at this time.

National LTR averages

The spot market for truckload has developed a pattern below the 5-year average for LTR that is expected to persist for some time, contributing to the “over supply” experience of today’s market.

In general, the hypothesis is that capacity has mostly been shifting from owner-operators to the shelter of employment within larger carriers rather than a large exodus of capacity. The market has the near-term possibility to inject more capacity as carriers take delivery of back-ordered tractors. It is unclear how much capacity has exited the market.

Small carriers that are struggling may need to declare bankruptcy and then reincorporate as a DBA. Other capacity may return to its pre-pandemic status of lightly used or parked. These migrations of talent and capacity make for a fluid environment that is difficult to precisely measure.

The first set of figures below shows the current truckload spot market LTR with the five-year averages. Of late, today's market is trending below the five-year average, which is one indicator that suggests the market is oversupplied.

Dry van LTR

Dry van is the largest segment of the truck market. It is performing strongest against the five-year average in most markets across the country.

Dry Van load to truck ratio 5 year comparison

Refrigerated van LTR

Refrigerated truckload continues to offer some regional tension and slack but has established a long pattern below the five-year LTR.

refrigerated load to truck 5 year comparison

Flatbed LTR

Today's flatbed spot market continues to offer plentiful capacity in most markets with LTRs well below historical averages.

flatbed load to truck ratio 5 year comparison

Regional LTR averages

Regional perspectives can help you understand and plan for optimal market performance. Shown here are LTR at the point of origin for the week 45, November 13–19, 2022.

Note how the colors indicate different ranges of LTR by each of the three truckload services. Some lanes from an origin may perform better or worse than the LTR might indicate. Our research and experience confirm that an origin-destination pair can have more or less attractive features to the capacity market than the regional average tension might indicate.

While harvest season for fresh produce is largely finished, the upper Midwest is experiencing tension in van and refrigerated capacity due to the harvest and shipping season in that market.

Regional dry van LTR

Dry van continues to display a yellow (3.4 to 6.9:1 LTR) in some of the major freight markets—between TX and MI as example—with a national average of 2.3:1.

Dry van spot market heatmap DAT - C.H. Robinson freight market insights 11.17.22

Regional refrigerated LTR

Despite regional variances, the national LTR for refrigerated truckload during week 46 was at 4.8 with a 5-year average of 8.5.

Reefer spot market heatmap DAT - C.H. Robinson freight market insights 11.17.22

Regional flatbed LTR

Today's flatbed spot market LTR of 8.7 shows some regional tension from the Southeast coast over to Texas.

Flatbed heatmap DAT - C.H. Robinson freight market insights 11.17.22

Contract truckload environment

Most (75%–85%) of the U.S. for-hire truck market is moved through commitments most often managed via hierarchical route guides and dedicated truckloads. In 2021, the percent of freight in the contract market was on the lower side of this 10% variation; and in 2022 most analysts estimate the contract percentage is on the higher side of this spread.

Route guide performance

Companies commonly use waterfall (or hierarchical) route guides to manage awarded freight on lanes with some level of demand pattern predictability. The following insights are derived from TMC, a division of C.H. Robinson, which offers a large portfolio of customers across diverse industries throughout the United States.

Two key metrics of route guide performance are first tender acceptance (FTA) and route guide depth (RGD). RGD refers to how far into a route guide a shipper must tender shipments before carriers accept loads, or the average number of tenders per load. FTA is a percentage of how often the awarded primary transportation provider accepts their shipment tenders.

These insights are from the week of November 6–12, 2022, and also reflect on RGD from the month of September.

RGD by U.S. region

The regional view continued to show the Northeast displaying the most challenging RGD. With a national average RGD of 1.18, largely unchanged from October. The Northeast pattern continues with the highest RGD of 1.31, but offered some improvement in early November after two weeks of increasing performance issues.

Broadly speaking, route guides are performing well, with primary service providers accepting loads at pre-pandemic levels and the first backup provider accepting rejected tenders most of the time.

Routing guide line graph - TMC + C.H. Robinson freight insights 11.17.22

The chart above from TMC, a division of C.H. Robinson, reflects weekly RGD regionally across the United States through the week of November 6–12, 2022.

October FTA for North America improved a percentage point from September to 89%

This FTA is much improved from the lowest pandemic point of January 2022, which was 79% and 80% in August 2021.

Load tenders that are rejected in today's market tend to be those that are unattractive to carriers for one reason or another, such as:

  • Low volume or variable demand patterns that make predicting the tender difficult and preassigning capacity
  • Historically excessively long dwell events at origin and/or destination.
  • Price is below market for loads with unattractive attributes requiring a price above market to offset the issues with the load.

While it is tempting to relax efforts to improve the attractiveness of loads as well as shipping and receiving locations with market tension as it is today, carriers are increasingly aware of the correlation between long dwell events, driver experience, and driver retention. Shippers and consignees should continue efforts to become “favored shippers” so as to be a priority when market tension returns.

October RGD across distance bands

For October, all three distance bands experienced improvement in RGD as primary providers increased their acceptance and the first backup accepted most primary rejections:

  • Short haul (less than 400 miles) posted an improvement of 1% from October—about 1.2.
  • Middle distance (400–600 miles) improved 4% from September to 1.25. This is the fourth highest RGD in October in the last five years, down 33% from last year.
  • Long distance (over 600 miles) improved 3% from September to 1.21 and is the fourth highest RGD for October in the last five years.

U.S. spot market dry van truckload rate per mile insights

The 2023 cost per mile forecast: End of year slightly more than where the year will begin

Shown below is the C.H. Robinson 2022 and 2023 truckload dry van spot market cost per mile forecast without fuel. Like others, this forecast has been and will continue to be amended as economic forces shape freight volumes and the capacity community responds.

  • The dark blue solid line is DAT's cost per mile to carrier without fuel.
  • The dark blue dotted line is the C.H. Robinson forecast for 2022.
  • The light blue dotted line is the C.H. Robinson forecast for 2023.
  • The forecast is bounded on the bottom by the estimated cost per mile to operate a truck.

When looking at previous market cycles, the cost per mile to operate a truck has been the bottom of the market. Then supply tends to contract, creating tension and pricing inflection. The length of time a market is at the bottom varies by the economic conditions and the level of oversupply.

Average cost per mile change Y/Y for the dry van spot market:

  • 2022 vs. 2021
    C.H. Robinson forecast suggests a 13% decline in average cost per mile.
  • 2023 vs. 2022
    C.H. Robinson forecast suggests a 15% decline in average cost per mile.

When viewing the 2023 decline in average cost per mile consider that 2023 faces a 2022 comparable inflated by the Omicron COVID-19 wave seen in Q1 2022, which effectively decreased the active fleet due to illness, creating capacity scarcity, and driving up costs. Costs settled back quickly as drivers returned from illness and capacity aligned with decelerating freight volumes.

For 2023, the C.H. Robinson forecast shows normal seasonal downward movement of cost per mile in January and bottoms out at the estimated cost per mile to operate a truck.1 The balance of 2022 is expected to follow historical seasonal patterns and close the year at a cost per mile very close to the forecast at the opening of this year.

C.H. Robinson will continue to apply its broad market costs and market experience to the forecast and continue to present updates on a regular cadence.

1) Estimated cost per mile to operate a truck is a C.H. Robinson forecast based on the American Transportation Research Institute (ATRI) historical costs to operate a truck through 2021.


Spot market forecast - C.H. Robinson freight market insights Nov. 2022

DAT National dry van linehaul cost per mile is the broker to carrier cost, which excludes fuel surcharge. The C.H. Robinson forecast is an extension of that cost.

When reflecting on the average cost per mile to operate a truck, note that this is a national average across the carrier community. Accordingly, it aggregates carriers of all sizes—from owner-operators to the largest fleets.

Each carrier will have a different cost to operate per mile based on a host of variables with a key variable being the amount of empty (non-revenue generating) miles the carrier experiences.

The large portfolio of shipments C.H. Robinson handles is just one of the reasons carriers choose to haul for us. With so many load options, carriers can more easily find loads that decrease their operating expenses. This in turn creates more capacity options for shippers that work with C.H. Robinson.

Diesel pricing outlook

There is much conversation in the market about the U.S. days of supply of total distillate.

Defining the insight

The "days of supply" figure provides an estimate should the U.S. not produce or import. However, the U.S. continues to produce and import. The most current statistic showing the week of November 4, 2022, was at 26 days. Visit the EIA website for the most current inventory level.

The image below shows the historical days of supply. Analysts reporting on this situation represent that while inventory is at the lower end of the historical patterns, production, imports and lower forecasted demand suggest this level of inventory will not result in an outage or shortage.

Diesel supply insights - C.H. Robinson Freight Market update Nov. 2022

Diesel in the news

According to the U.S. Energy Information Administration:

  • A gallon of trucking’s main fuel now costs $1.579 more than it did at this time in 2021.
  • The average price of diesel rose in 6 of the 10 regions in EIA’s survey; it dropped in four.
    • The largest increase was 9.5 cents in New England.
    • The largest decline was 5.1 cents in the Gulf Coast region.
  • California still has the costliest diesel in the nation with an average price of $6.180 a gallon—12 cents more than the second-most-expensive region, New England.
Short-term energy outlook

According to the (EIA):

  • Retail diesel prices will average $4.86/gal in Q4 2022 and $4.29/gal in 2023.
  • U.S. crude oil production in our forecast averages 11.7 million barrels per day (B/D) in 2022 and 12.4 million B/D in 2023, which would surpass the record high set in 2019.

Voice of the carrier from C.H. Robinson

C.H. Robinson has two customer communities, shipper customers and carrier customers. What follows are insights from conversations with carriers of all sizes to offer perspective into their top concerns over the past month. Below is a summary of the reoccurring themes.

Carrier market insights

  • Carriers with over 50 tractors: Focus on contracted awards with very little capacity available for the spot market.
  • Focus on quality service: All carriers cite renewed focus on quality service. As such, many are prioritizing their best drivers with the most attractive freight in their portfolio.
  • Acquisitions in the coming months: Multiple carriers cited strategies to acquire struggling carriers.
Equipment

  • Supply and demand balance: Many carriers cited the challenge to purchase incremental assets during the COVID-19 pandemic has prepared them for this cycle. Most cite well-balanced fleets.
  • Trailers: Carriers report receipt of most back-ordered trailers.
  • Tractors: Back orders are coming in with some still to be delivered.
  • Parts: Continued high pricing and inventory issues on maintenance parts.
  • Drop trailer dwell: Carriers report increasing dwell times in today's market.
Trucking labor:

  • Driver recruiting: Larger markets have an easier time recruiting than rural markets.
  • Applications are at good levels: Yet qualified applicants are more difficult to come by.
  • Driver preferred freight attributes: Drop and hook with home time every week.
  • Long haul roles are most difficult to fill.
  • Teams continue to be difficult to staff and are in short supply.

The frequency and cadence of getting home is the leading concern of drivers and central to turnover and recruiting. Dwell time is cited as the second key challenge.

Imports and inland transportation

Places where the global supply chain meets North American supply chains—like ports and airports—are also affected by the cyclical market and other disruptors. Here is a look at top influencers impacting imports.

West Coast labor negotiations

Negotiations between the Pacific Maritime Association (PMA) and International Longshoreman's and Warehousemen's Union (ILWU) continue now well past the July 1, 2022, agreement expiration.

Both sides continue to talk and have cited no workflow disruptions are planned. The main sticking point/challenge with discussions is over a union jurisdiction issue. The Biden administration is monitoring the negotiations and White House supply chain envoy, Stephen Lyons, has said he is optimistic a deal will be reached this year.

The Oakland terminal picketing and shut down of three terminals on November 2, 2022, reported as disconnected with the contract itself and the ongoing negotiations. The Oakland situation was a clerk dispute and was resolved quickly. It focused around not being paid the proper amount of wages owed in a timely manner (Source: sfgate.com).

Hours of service exemption

These exemptions aiding dray services of COVID-19 related imported materials were not renewed. First issued by FMCSA in March 2020 following the national emergency declared by President Trump in response to COVID-19, these exemptions had been extended and/or modified over 10 times. The most recent extension, which was issued in September and expired the first week of November, was not renewed.

Select port insights

For a full set of port insights, please contact your C.H. Robinson representative.

The Port of Charleston

Container terminal gates will continue to be OPEN on Sundays 0800–1700 through December 18, 2022. This will continue to allow for reduced congestion and fluid truck movement. Charleston is currently the ideal routing location for East Coast freight.

New York/New Jersey

The lack of available appointments to retrieve import containers means containers are left in the port past the last free day (LFD). Retrieval of containers on the same day as discharge is not possible in ports that require appointments so advanced planning is required.

Cleveland, Columbus, and Cincinnati

Lead times have reduced overall due to a decrease of import volumes. Carriers are still cautious and stress that chassis shortages continue despite the volumes.

Chicago

Chassis shortages (mostly 40') remain primary constraint. Average chassis dwell time according to the providers is currently about 14 days. Carrier capacity is strong though as volumes are down Y/Y by about 15%. Turn times average 82 minutes according to the Illinois Trucking Association and Geostamp. The chassis shortage in Chicago is exacerbated because drivers cannot reuse the equipment they drop off, reducing efficiency. This is also seen in other inland markets across the United States.

Midwest

In general, all Midwest facilities continue to face chassis shortages.

Dallas/Fort Worth

Both Union Pacific and BNSF ramps continue to experience severe chassis deficit due to the increased volume of freight.


For an entire portfolio of insights, visit our Global Freight Market Insights or contact your C.H. Robinson account manager.

Temperature controlled shipping

Fall refrigerated season creates demand as anticipated

This fall, the market consists of commodities like apples, pumpkins, as well as frozen goods supporting holiday cooking and baking season. Currently the upper Midwest is experiencing meaningful tension as the region ships sugar beets, potato, and other fall vegetables. The Pacific Northwest shipping continues with apples.

Fuel, parts, and maintenance are a cost focus for refrigerated carriers

Increased carrier cost impacts remain material for the refrigerated truckload community. Carriers’ cost of operations has continued to climb, especially for refrigerated carriers with refrigeration diesel fuel costs to consider on top of diesel for driving and labor, along with maintenance cost increases, among others.

With pricing compressed as it is, carriers are looking for ways to reduce fuel and occasionally choose to set their refrigerated units on 'cycle', lowering the fuel need, but bringing increased temperature variation to the trailer and goods. C.H. Robinson works closely with our contract carriers on temperature expectations to help safeguard the quality of goods in transit.

Work with experts in temperature control shipping

Connect with our experts to learn more about how seasonal and supply imbalances affect your business and how our unique refrigerated transportation procurement and capacity solutions can help your shipping strategy for the next market cycle.

Flatbed

Of the three primary truckload services (van, refrigerated, and flatbed), flatbed is demonstrating the greatest capacity opportunity with the spot market LTR level patterning below five-year averages.

Equipment

  • High cost of financing new equipment will constrain flatbed fleet expansion, but carriers will continue to modernize existing fleets.
  • Drop trailer flatbed services expand as carriers leverage regional opportunities and high density lanes.
Market supply

  • Spot market LTRs remain as historical lows, creating the opportunity to firm up strategy and commitments for the next upcycle.
  • Select markets are experiencing pre-winter project wrap up surges, creating regional market pressure.
Flatbed strategies to implement

  • Depending on business needs, some companies are holding firm for scheduled annual request for proposals (RFPs) while other shippers have pulled forward RFPs in an effort to secure capacity and lower pricing in the near term.
  • Awards lasting 12 months are again becoming a common strategy seen in current RFPs with some strategic access to the spot market included for a segment of the shipper’s freight portfolio.
  • Transactional buyers are engaging the spot market and advising that they are working to discern when to move to an award strategy so as to ensure capacity for the next upcycle.

Please engage your C.H. Robinson team for shipment and market data that can help you make the most of today's flatbed market and establish a strategy for the next upcycle.

Cross-border shipping: Canada

Canada spot truckload market

In September, the spot market in Canada saw a reversal from its mild gain in load volume the previous month dropping 7% from August and 20% Y/Y. (Source: Loadlink).

While September’s truck to load ratio was 3.65, just 5% higher than the ratio of 3.48 in August 2022 and 38% higher than September 2021, a handful of intra-Canada corridors continue to experience growth:

  • Canada to United States: Up 7% M/M and down 27% Y/Y
  • United States to Canada: Down 22% M/M and down 12% Y/Y
  • Intra-Canada: Down 2% M/M and down 6% Y/Y

Loadlink's October report was not available during the creation of this report, however the outlook will most likely be identical to September due to similar trends seen in October. Scarcity of inbound freight from the United States to Canada continues and the impact is now felt on some outbound corridors where carriers are requesting rate increases to cover the cost of a likely empty return home.

The spot freight market is softer than typically seen at this time of the year and will likely continue into 2023. Spot rates are at a point where carriers struggle financially and can be considered largely at cost of operations or the bottom of the market.

Canada's ELD mandate

The electronic logging device (ELD) mandate will go into effect on January 1, 2023, for federally regulated carriers. According to Truck News, it will now see mixed enforcement by different provinces across Canada.

Newfoundland and Labrador, New Brunswick, Ontario, Manitoba, and Yukon

Begin enforcement on the planned date.

British Columbia and Quebec

Are unable to enforce the federal regulation by January 1, 2023, but expect to enforce it sometime in 2023. No specified date has been provided.

Northwest Territories

Are unable to enforce the federal regulation by January 1, 2023, but expect to begin enforcement sometime before the end of January.

Alberta and Saskatchewan

There are no current plans to require ELDs provincially.

Provincial carriers that operate on Prince Edward Island

These carriers only operate within a 160-km radius, which does not require a logbook or an ELD.

Today’s intra-Canada and cross-border trucking market is well balanced, supporting existing freight volumes and flows. Connect with your C.H. Robinson representative to develop a strategy that will result in a successful operation in the forthcoming upcycle.

Cross-border shipping: Mexico

Capacity availability

The automotive industry is a meaningful contributor to cross-border freight between Mexico and the United States. With manufacturing still constrained due to inbound supply chain issues for items such as semi-conductors, automotive related freight volumes continue to lag historical levels.

This prolonged situation has carriers seeking other freight opportunities and interest to diversify their industry portfolio away from exclusively focused on the automotive sector. Broadly speaking there is capacity available beyond the automotive carriers as well. C.H. Robinson has high quality capacity available and is working with our carriers and customers on developing smart, diverse strategies for 2023.

Cyber-attack resolved

The Secretary of Infrastructure, Communications, and Transportation (SICT) stopped issuing new commercial vehicle permits and licenses for a period of two weeks in October following a cyber-attack. The SICT announced that among the measures it took to contain the threat, was the suspension of all services for the two-week period. In doing so, it hoped to repair any technical issues and gradually reestablish access to the systems.

Multiple services were suspended during the period and the SICT extended the validity of licenses and certificates for those that were in process but could not be completed due to the outage. The service was reestablished this week but catching up with permit allowances is expected to take longer.

Please work with your C.H. Robinson representative for more information on key markets and strategies to get the most from today’s market.

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Intermodal Shipping

TOP STORY: Add intermodal now for increased elasticity

Capacity is plentiful (even with volumes tracking close to 2021) as transactional intermodal freight has been seeking out plentiful truckload capacity. Now is an exceptional time to reflect on your full load strategy—build diversity of both truckload and intermodal into your plan to bring increased elasticity for the next upcycle.

Rail performance continues to improve

Train speeds have increased about 3.5% in the last 15 weeks with continued improvement expected. Additionally, domestic and ocean dray capacity has improved as drivers are migrating from the long haul spot market to other trucking segments where capacity is needed.

Containers and chassis are plentiful for most domestic services. Chassis shortages and dwell issues do persist at ocean inland intermodal hubs as outlined in the ocean insights section above.

Rail labor strike concerns

Concerns of the rail strike persist in the shipper community. Continue to keep a watchful eye over the ongoing negotiations between the unions and the railroads. The widespread optimism that the tentative deal reached in September would be ratified diminished as time has elapsed and some small unions have since voted to reject those terms (the latest being November 14, 2022) and negotiations continue. As of the release of this publication, there remains optimism for a ratification vote.

The two largest union votes are set to publish news on their votes by November 21, 2022. Should they vote to approve, the other smaller unions are expected to follow that approval. Should ratification not occur, the first week of December is the earliest a work stoppage could occur. A work stoppage will likely be followed by congressional efforts to force a resolution and keep a work stoppage to hours versus days.

Contact your C.H. Robinson account manager or sales representative for the latest on the labor negotiations and to discuss a blended intermodal and truck strategy.

Less Than Truckload (LTL) Shipping

TOP STORY: LTL pricing remains more resilient than truckload

The LTL industry continues to demonstrate its participation in the broader freight market does not necessitate the same market reality as truckload. The LTL carrier community has the benefit of a much smaller community of roughly 110 carriers with the top 25 billing about 91% of LTL revenues.

This structure accompanied with the following, result in a trucking segment that is not likely to give up much on pricing in 2023:

  • Freight volume growth has exceeded capacity growth for several years
  • Adoption of dimensionalizers that calculate real-time shipment density
  • Making use of immense data environments
  • Selecting freight that contributes to yield
  • Continuing to expand the manufacturing industry even if at a decelerating rate
  • Continuing to expand the middle mile ecommerce freight segment

The LTL industry is in a very healthy position, continuing to invest in capacity expansion where supply to demand can still be broadly described as balanced to stressed in most markets.

LTL volume outlook

Analysts expect flattish or slow growth in Q4 2022 with some carriers reporting positive tonnage in September and October that could continue in Q4 with retail inventory moves, ecommerce middle mile, and industrials. The coming year could be flattish in Y/Y volume.

Industry capacity remains tight

While some carriers have been growing door and terminal counts, others, like Yellow and TForce, have been consolidating their networks. Accordingly, some carrier terminals have volume and/or consignee specific embargos. Additionally, there are a few corridors that have some renewed opportunity.

Work with your team and C.H. Robinson representative to avoid potential disruptions and pursue the right opportunities.

LTL pricing

2022, LTL pricing is forecasted to end between 10% and 13.8% over 2021 according to forecasts from ACT Research and FTR. LTL carriers have been posting general rate increases (GRIs) early this cycle with many in the 3–5% range Y/Y.

With continued volume pressure on most crossdocks and equipment and labor shortfalls, it is expected that the LTL carriers will follow a disciplined approach to 2023 pricing in an effort to ensure high yields that can support growth investments. Over the two-year period of June 2020 to June 2022 LTL pricing increased roughly 20%.

Pricing increases from this point forward may be more aligned with historical single digit figures but expect continued discipline on accessorial fees for services and shipments that don't fit well within carrier operations.

Work with your C.H. Robinson representative on a portfolio strategy and customer-specific pricing to garner the best price and service possible.

Terminal expansions

As noted above, some carriers are rationalizing their terminal structures while others are expanding. This may make it more difficult to get a precise figure for planned expansion, however 2023 could be the third year in a row of 1–2% growth rate for door/terminals in the United States.

This growth pattern is a meaningful change from years of rationalization and contraction of terminal capacity. Three of the top ten LTL contract carriers C.H. Robinson works with have announced a total of 21 new terminals and 1,571 new dock doors. Note that carriers are primarily adding terminals to improve existing footprints rather than expand territory coverage.

eBOL initiative approved

This is the first step in transitioning off the paper bill of lading (BOL). The approval had a high percentage of Digital Council of National Motor Freight Traffic Association (NMFTA) members signing the pledge to work toward adoption of electronic bills of lading (eBOL).

Select carriers are already ready transitioning to eBOLs. C.H. Robinson is in process to convert customers to eBOL for those carriers that have switched already. Reach out to your C.H. Robinson representative for questions on this industry initiative.

Small Parcel

General rate increases

October’s announcement by FedEx of a 6.9% GRI was a record increase proposal that has not been followed by UPS’ 6.9% GRI. UPS’ increase will go into effect on December 27, 2022, one week before FedEx’s will take effect.

A notable difference between the two carriers’ GRI is that FedEx is taking a larger increase on the 3-day service category, where UPS took a larger increase in this category last year.

Budgeting against the GRIs

Increases are typically spread across multiple service lines, weight breaks, zones, and surcharge concessions. Discerning how this impacts a parcel budget is addressed through modeling scenarios that will help guide strategic decisions.

Due to the varied ways these GRIs are structured and individual shipper parcel profiles, it is not expected that most shippers will experience a budget increase at 6.9%, there is exposure for even greater increase in total spend.

Peak parcel season

This year’s forecasts suggest capacity will eclipse parcel volume, resulting in a very different holiday season from 2021. Shipmatrick has estimated that the market will be saturated with enough capacity to handle 110M packages per day, while only seeing demand of 92M packages per day. The 2022 peak surcharges may be negotiable as a result.

Guaranteed service

FedEx has suspended some money back guarantee services for peak season. Six overnight delivery services in the United States and four international services (including expedited deliveries). This is the third year for select suspensions for air services during peak season.

Government and Regulations

TOP STORY: What to expect after mid-term elections and into 2023

With the mid-term elections mostly behind us, Congress will be consumed by the transition to the new two-year session until mid-January 2023. Regardless of whomever is in the House and Senate leadership and committee chairs, anticipate a handful of important policy debates and Congressional “must pass” bills in 2023.

At the end of September 2023, authorization for the FAA and aviation-related policy and spending expires. Since this will likely be the highest transportation policy related bill in 2023, be sure to look for other issues related to trucking (like independent contractors, etc.) to be attached to this bill.

In addition, customs re-authorization (also known as 21st Century Customs Framework or CCF), will also be working through the House and Senate in 2023. Issues of trade policy and trade facilitation will be included in this bill. Finally, look for a new U.S. Freight Office to be launched within U.S. DOT in mid-2023.

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