Are we in for a late spring? It sure feels like it in the spot market, where brokers and carriers alike have been bracing through a long winter. Storms and other tough weather conditions early this year have led to a slight spike in rates, but market conditions are shrinking, and companies everywhere are experiencing capacity challenges galore. Too much truckload supply and not enough demand is creating a marketplace unlike anything we have seen in the last decade.
What does that mean for the spot market?
While it’s not looking great, there is hope on the horizon. Momentum is building slowly after severe winter weather brought in a temporary bump, however rates settled shortly thereafter. With smaller carriers being left with no choice but to exit the market the question remains whether this momentum will keep building in the coming months, but historical data seems to predict that things will continue to improve as the economic landscape shifts.
What is the spot market in trucking?
Our industry has two markets: contract and spot. Established carriers operate within the contract market, working with clients over the long term and hauling freight on a consistent basis with pre-arranged rate agreements. Outside of established business, carriers must resort to finding their own loads last minute on the open market, where goods must be moved “on the spot” (hence the name), often as one-off shipments. Truck capacities are bid on demand by haulers and brokerage authorities of all sizes, and rates can be all over the place, driven by need and desperation to keep assets moving. Understanding seasonal trends, driver availability, fuel costs and other factors are key to navigating the trickier angles of the spot market.
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