The term freight refers to goods transported through the supply chain using various modes like trucks, trains, ships, or planes. Freight rates represent the cost that shippers pay carriers for transporting their cargo, especially in the truckload (TL) market. These rates are influenced by a variety of factors, including economic demand, fleet availability, fuel costs, weight, distance, and the nature of the goods being shipped. Negotiations between shippers and carriers determine freight rates, either through long-term contracts or on a spot basis. During key periods such as RFP season, companies rely on data from sources like ACT Research and DAT to make informed decisions when submitting bids. This helps them stay competitive and manage costs effectively throughout the year. Understanding current freight rate trends is crucial for businesses to adapt to the ever-changing truckload market and plan their logistics strategies accordingly. Beyond the truckload cycle, which plays a significant role in shaping rates, several other factors contribute to fluctuations. According to Tim Denoyer, an analyst at ACT, "It all comes down to supply and demand." When demand outpaces available capacity—whether in terms of drivers, tractors, or overall fleet size—rates tend to rise. Conversely, when supply exceeds demand, prices fall. This dynamic creates a cyclical pattern in the industry. To better understand this, let’s look at two key elements: economic demand and fleet capacity. Almost every product sold in the economy moves via full truckload freight. The retail and industrial sectors are the largest consumers of TL services. As the saying goes, “If you bought it, a truck brought it.†When the economy is strong, consumer spending increases, leading to higher freight volumes. In contrast, during downturns, reduced spending lowers freight demand. Over time, freight generation per capita remains relatively stable, but slower population growth can have long-term effects on overall freight activity. Freight demand typically peaks early in the economic cycle when businesses expand and build inventory. However, it tends to slow later in the cycle, often leading to short-term freight recessions—more frequent than general economic downturns. These cycles usually last about two years on the upswing, with downturns lasting anywhere from a few months to two years. The shipments component of the Cass Freight Index dropped 1.7% month-over-month in September after a 1.0% increase in August. The index fell 2.6% in seasonally adjusted terms from August to September, and shipments declined 5.2% year-over-year in September, following a 1.9% drop in August. This decline reflects ongoing shifts in private fleet insourcing, even as Class 8 tractor sales rose in Q3 after supply constraints in Q2. After rising 13% in 2021 and 0.6% in 2022, the index dropped 5.5% in 2023. With normal seasonal patterns, the index is expected to fall about 3% y/y in October and 4%-5% in 2024. As capacity increases, consumer behavior changes, and inventory is replenished, which can reduce freight demand. The concept of trucking capacity is fluid—older vehicles may be reintroduced into service during tight markets, while less efficient units may be retired during slack periods. Class 8 tractors over 11 years old are typically not used in active freight operations, though this varies across fleets. When conditions tighten, these older trucks may return to the road, while they are phased out when rates decline. During a freight recession, we’re seeing rates decline across the board. In such times, the rate spread between flatbed and reefer trucks relative to dry vans tends to widen. As the market recovers, dry van rates catch up, narrowing the gap slightly. However, the spread remains wide through the mid-cycle and eventually contracts in the late cycle. But is there much difference between the types of trucking? Let’s break it down: Dry van trucks transport dry cargo in enclosed trailers. This is the most common and standardized form of truckload shipping, primarily used for retail goods. Refrigerated (reefer) trucks carry temperature-sensitive goods like food, pharmaceuticals, and films. Rates in this sector tend to be more stable compared to other trailer types. Flatbed trucks haul cargo on open platforms without sides or a roof. They are commonly used for heavy or oversized items like machinery and construction materials. Flatbed rates can be more volatile due to seasonal demand. Although each type of trucking has its own dynamics, most tractors can handle any of the three main trailer types, linking all segments of the market together. Contract freight rates are fixed prices agreed upon for a set period, while spot rates are temporary prices for one-time shipments. While spot rates are often seen as more volatile, both options come with their own advantages and disadvantages. Many businesses use a mix of contract and spot rates to manage risks, cover unexpected changes, and support both short- and long-term logistics strategies. Msp Element,Type U Sealing Element,Tapered Rubber Seal Element,Bop Type U Sealing Element Sichuan Xinwei Rubber Co., Ltd , https://www.boprubber.comWhat Factors Influence Freight Rates?
Economic Demand
Fleet Capacity
How Do Rates Differ Between Each Type of Freight Trucking?
Dry Van Trucking
Refrigerated Trucking
Flatbed Trucking
How Do Freight Rates Differ Between Contract and Spot Trucking?