Is The Freight Market Posed For A Comeback? 

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GOODBYE 2023. HELLO 2024!! WELL, WE HOPE SO AT LEAST.
 
Most players in the freight market were very happy to see 2023 pass and fade away in the rear view mirror . What a crazy, depressing, flipped upside down market it was. The likes of which haven't been seen in decades and many thought they would never see again. If you were a new broker or carrier who entered the industry during the COVID boom, you were just taught a very valuable lesson; what goes up must come down! And HARD.
 
 
Everyone understands the transportation market is very cyclical and has seasons that change the ebb and flow. But what we all just witnessed (and hopefully survived) was a market unlike any other. COVID created a period of glutton; rates were astronomical, shippers were bulging at the seams with freight, and new carriers were welcomed with open arms - and large books of business.
 
 
Too big to fail. Too much investment money to fail. Too established to fail. All wrong answers for the freight gods and punish they do. Here we are wrapping up Q1 of 2024 and we are still counting the bodies.
 
 
June 2022 was the last time the Transportation Price Index (The LMI) posted a number like 57.6. A hint of an acceleration out of the darkness of the freight recession??? February's TPI of 57.6 was a 0.9 point increase of January 2024, potentially signaling better days to come. Inventory levels, warehouse utilization, transportation capacity and utilization, and transportation prices all showed growth increasing at an increasing rate. Transportation prices growth rates are the highest they have been since the beginning of the freight recession in June of 2022. February was the sixth time in the last seven months that the LMI has reflected growth. These numbers have the Upstream Transportation Index (60.9) to thank as it reflects that manufacturers and wholesalers are starting to move inventory, all while the Downstream Index (52.7) is reflecting a slower rate of price increases for retailers.
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THE EQUILIBIUM IS APPROACHING
 
 
Logistics and freight analysts are constantly monitoring the proverbial room and for the last year and half it has been very, very crowded. While its never a pleasant thing to see, everyone is watching and hoping for continued exits - both carriers and brokers.
 
 
Coupled with a volume collapse from shippers, was a peak period in 2020 to early 2022 in which an incredible amount of new entrant carriers and brokers emerged that created an imbalance. The supply of freight was minuscule in comparison to the demand for it resulting in THE GREAT RATE WARS circa 2023. Carriers and brokers were forced to bid, and re-bid, and re-bid ever lower each time for their continuing business. The race to the bottom has resulted in evaluating how much reserves in were in the tank to keep the doors open. Profit is no longer an option.
 
 
88,000. Yes, that figure is correct. 88,000 carriers exited the industry in 2023. The largest number in decades, but this time it took with it some big names. Yellow for example. Freight brokerages faired no better. Convoy being the largest headline of the year as the industry watched its astronomical rise and even quicker fall as over 500 employees lost their jobs. While some brokerages persevered, most were forced to reduce workforces and eliminate positions.. Uber Freight, Flexport, Coyote, CH Robinson, and FedEx to name a few.
 
 
Equilibrium is approaching and we can see the light at the end of the tunnel. As supply and demand begin to reacquaint themselves in their balance and harmony, prices will soon follow to rest at pre-pandemic levels. All will be well in the universe. What this freight recession has taught us is; relationships are everything. Relationships with your broker, relationships with your carrier, relationships with your vendors.
 
 
A GOOD broker provides good rates to you, when the market allows.
 
A GREAT broker grows your company in the most difficult of times.