Commentary by Jaclyn Van Orden
The 2017 corporate tax cuts have been the catalyst to multiple ripples in the logistic market. These ripples can affect your current accounts, shipping rates and most specifically, spot market quotes. Being familiar with the current market trends can help you better consult your clients and make smarter quoting decisions.
Last year’s freight boom produced surging freight volumes and tight truck capacities which had shippers scrambling to book loads and carriers taking advantage by extracting double-digit rate increases. The 2017 corporate tax cuts created massive profits in 2018, which resulted in record demand for new equipment and an oversupply of trucks. In response to the surplus in big rigs, the supply-demand equilibrium is tilting away from truckers and providing shippers with the upper hand.
“The industry bought a lot more trucks than we realized that they did,” Doug Waggoner, Chief Executive of Freight Broker Echo Global Logistics Inc, reported. “Relative to last year at this time, there is less demand for capacity and that, coupled with an oversupply of trucks, means there’s little to no spot freight and all truckload prices have come down dramatically.”
Last month on DAT’s platform there were about three loads for every available truck, compared with six loads per truck in June 2018. This will especially affect spot market freight while shippers try and take advantage of the lower last-minute rates rather than being tied down to a contractual agreement.
To learn more about the surplus in trucks and how that will affect your carrier rates, please read the full article recently published in the Wall Street Journal. https://www.wsj.com/articles/truckers-wrestle-with-oversupply-of-big-rigs-falling-freight-rates-11564311602