Has the Trucking Market Returned to Normal?

Has the trucking market returned to normal? Due to the past few years of market volatility, this is a common question from everyone in the transportation sector – shippers, carriers, 3PLs and researchers alike.

The question begs another question—what is considered ‘normal’? When it comes to the trucking market, normal may be a matter of perspective.

Truckload market indicators demonstrate a healthy, well-performing market

There are three primary trucking market segments: for-hire contract/committed, dry van spot market and private. For brevity’s sake, we will focus on the dry van spot market and the contract/committed market segments. These two segments represent a very large percent of the for-hire market.

Recently, they have gone through a market correction, returning to pre-pandemic performance. For many, this return to pre-pandemic performance could be viewed as “normal” and brings comfort to planning and forecasting.

With both the spot and the contract/committed market, there are metrics to measure current state and benchmark what is considered ‘normal’.

When it comes to the spot market, a commonly used metric from DAT is the Load-to-Truck Ratio (LTR). This represents loads to trucks posted on DAT’s platform. The chart below shows that after the Q1 correction, the market has been bouncing around the five-year average since roughly week 13. Should we call this normal?

DAT truckload ratio graphic

On the other side, the contract/committed market measures performance through hierarchical route guides, the most common approach to awarding and executing for-hire shipments. The percent of times that the “awarded” transportation provider accepts the initial shipment tender is called First Tender Acceptance (FTA). According to data from TMC®, a division of C.H. Robinson, we have been seeing FTA at pre-pandemic levels. And when the awarded service provider rejects a shipment tender, the shipment is covered nearly every time by the first back up. Rarely are shipments drifting to the spot market.

Overall, these two lenses suggest a healthy and perhaps ‘normal’ market.

A new normal on the horizon?

Below, we highlight the current cycle as edging closer to "oversupply." The truckload market cycles through phases where capacity is in greater supply than freight volume (oversupply) to capacity being well below freight volume (undersupply), with a transition period between each phase.

graphic for freight market

Figure credit: originally narrated by ACT Research with image created by C.H. Robinson.

Today's market is well-supplied, but not fully oversupplied – yet. We expect there will be a market shift to oversupply if additional class-8 tractor purchases in 2022 create an expanded fleet and/or if freight volumes decline materially.

The key is that while this cycle is inevitable, the level of over and under supply (as well as the length of time for each cycle phase) is a result of market forces. What we can confidently predict is that the market cycle itself is actually the normal market.

Now is an exceptional time to review a transportation strategy and ensure it can offer the resiliency needed to move through the normal market cycle. Please seek out your C.H. Robinson account manager to learn about our supply chain and logistics researched strategies and transportation management tools to enable your transportation plan’s success.

Steve Raetz
Director, Research & Market Intelligence
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