Small and medium-size regional trucking companies adept at playing the spot market are expected to thrive as larger carriers are limited by the capacity crunch.
Indeed, as CCJ magazine reports, affordable technology is providing smaller fleets the freight management tools to understand the dynamics of the spot freight market at a time when larger carriers are forced to turn down more regional loads due to a shortage of drivers.
In a recent presentation with ITS founder and CEO Scott Moscrip, Stifel transportation analyst John Larkin credits “real-time data” in today’s growing spot market for providing “a window into the trucking industry that we’ve never really had before.”
Moscrip adds that trends point to “a vicious circle” in the supply chain where more freight is available in areas where capacity isn’t. “What’s been interesting is that, typically, in a year of this nature where there’s so much extra freight lying around, capacity tends to leave the load boards and the spot markets because more of the freight gets hauled under contract. This year we’re seeing an incredibly unique situation where we are actually seeing capacity move to spot market … so it’s almost a contract versus spot market rate battle.
“The spot market is becoming a larger fleet of capacity than it has ever been before.”
Going forward, Moscrip doesn’t see capacity expanding. Larger carriers, rather than increasing their fleet sizes with new equipment they can’t fill, have become more selective with freight are shifting less profitable loads to the spot market. On the flip side, because of increasing business on the spot market, fewer smaller carriers are entering into longer term contracts.
However, Moscrip notes that even with higher rates, carriers aren’t making record profits due to the rising costs of fuel, labour and compliance.