ACT Freight Forecast: Freight Market Transitioning from Mid- to Late-Cycle

ACT reports that overall freight volumes are still growing, with significant restocking demand

Tim Denoyer, ACT Research’s Vice President and Senior Analyst, said, “The roughly 15% drop in truckload spot rates, net fuel, since January has obviously been a big topic of discussion. We think most of this decline is the reflection of the Omicron effects that tightened capacity a few months ago, combined with ongoing progress on the hiring front. A few points are also due to the inability of the spot market to pass through higher fuel prices, leading to an extraordinary hit to rates, ex-fuel.”

Denoyer added, “The ACT For-Hire Driver Availability Index has returned to levels where freight rates turned down in late-2018 and 2019, as labor has recovered strongly from Omicron. We’re now in the late-cycle slower stage of the cycle, where ongoing slowing in freight volume and progress on capacity are ultimately deflationary for the rate cycle.”

He concluded, “However, overall freight volumes are still growing, with significant restocking demand remaining and long port backlogs persisting. And supply disruptions will continue, with the truck manufacturing cycle at heightened risk, which may result in tighter equipment capacity than currently expected, impacting market dynamics. Freight volumes have mainly weakened in the spot market, where load/truck ratios and load turndowns are falling sharply. While part of the transition to the late stage of the cycle, the broader market is not in freight recession yet.”

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