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Article: Capacity Crunch Triggers ‘Unprecedented’ Spike in Some Markets

Carriers hare reporting very little friction in getting rate increases from shippers, suggesting that market sentiment is changing, according to a column in logistics news outlet, Freight Waves.

Analyzing spot rate data and the aggregation of data of demand volume, the article says market pressures have triggered a capacity shortage mainly in the spot market which is leading to larger and more sustainable contract rate increases than most expected.

Truckstop.com said this was the highest number of load postings in its company’s history, according to the article while DAT also reported record activity on its load board, suggesting the capacity in the market has been tapped and shippers were resorting to brokers to find capacity in the super-volatile spot market.

From Freight Waves:

In fact, one CEO of a large asset van carrier that focuses in the expedited team market said, “This is different than any market I have ever seen before. I have been around this business for over 40 years and I have never seen an environment like this. I have heard people compare it to 2004, but that wouldn’t do justice to what we are seeing.”

According to one source … a super large intermodal player sent out a letter to top shippers on Friday informing of an imminent lane-by-lane rate increase that would take effect almost immediately. This is a significant development and suggests that not only does one of the largest intermodal carriers believe they can get rate increases, they are willing to do so intracycle.

Other carriers mentioned that shippers were complaining about service, but then asking for more capacity in the same conversation. Many of those additional loads came with rate increases. Even shippers with the largest purchased transportation budgets were almost begging for capacity and willing to take very aggressive rate increases, even if it were on their contract business.

One of the largest shippers in the US, spending nearly $5B freight transportation mentioned double-digit increases were expected in their budget, suggesting that +10% contract rate increases would not be shocking.

The larger carriers are not waiting to have out-of-cycle rate increase conversations. In fact, when shippers scream about service failures, the savviest carriers are using this as an opportunity to get rate increases, reminding shippers that their days of setting the market are over with.

Full Freight Waves article here.

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