ACT Research
Act For Hire Rates Oct

ACT: Freight rates well into ‘bottoming process’

Nov. 28, 2022
‘The seeds of the next tighter environment are being sown as rising costs and falling spot rates threaten the viability of the significant small fleet capacity which has recently entered the industry,’ ACT analyst says.

The supply-demand balance increased as volumes ticked up, and freight rates continued to decline, according to the latest release of ACT Research’s For-Hire Trucking Index, a monthly survey of for-hire trucking service providers.

ACT converts responses to its monthly for-hire survey into diffusion indexes, where the neutral or flat activity level is 50.

“The volume environment remains soft as the holiday shopping crescendo continues, but goods demand is soft and retail inventories are overstocked,” said Tim Denoyer, vice president and senior analyst at ACT.

“The seeds of the next tighter environment are being sown as rising costs and falling spot rates threaten the viability of the significant small fleet capacity which has recently entered the industry,” he said about capacity and rates. “And for the mostly larger fleets in our survey, capacity growth has slowed for three straight months.

“By our estimates, spot rates are further below costs than ever before, which could shorten the bottoming process. We also polled our fleet friends on contract terms and found some shippers pressing for more shorter-term contracts.”

Regarding the supply-demand balance, Denoyer added: “The reading reflects a loose trucking market and a late stage in the freight cycle. We believe the bottoming process has begun, and it’s possible that supply factors, including tight diesel inventories, could shorten the downturn.”