Jason Miller’s Post

Shippers take note. We might not be in a trend, but this spike demands attention. If you’re looking for ways to manage (what might be) an inflationary transportation market, reach out to me. My entire professional existence is to provide shippers tools and insights to ensure they have the best carrier strategy and an efficient way to execute and measure that strategy.

As usual, Jason Miller right over-the-target on the relatively "bearish" domestic truck market conditions and outlook. One key consideration: #Trucking is especially vulnerable to disruptions. For years, the overall elasticity of capacity has been tight, as market capacity utilization tends to remain above 90% and often above 95%. This means something as simple as a slight regional disruption from a storm can cause tension across the market. Events like the #canadianstrike can cause significant tension, especially if the disruption persists.

August is now mostly in the rearview mirror, so I wanted to provide an update about where dry van truckload pricing dynamics are for this month using DAT’s data on broker buy contract rates and dry van spot rates (both including fuel). Calculating contract less spot and dividing that figure by the average of the two series results in what I call the dry van spot market cycle indicator (DVSMCI). That is shown below with key dates for when pricing dynamics changed also included. Thoughts: •August’s DVSMCI currently stands at 16.8% (broker buy contract at $2.39 per mile versus dry van spot at $2.02 per mile), which places things in a weak pricing environment for carriers. We are well above the 10% threshold that has signaled transition to bull market pricing. •Consistent with this, the producer price index for general freight trucking, long-distance, truckload primary services was effectively flat in July month-over-month and down about 2% year-over-year (https://lnkd.in/d3EQCWH). •Stepping back, spot rates have been effectively flat since April 2023 (when they were $2.07 per mile). •It is very much starting to feel that predictions such as, “State of Freight for July: ‘Bullish’ market coming for freight economy” may have been premature (https://lnkd.in/gUHbrvVe) Implication: I continue to see no signs that dry van truckload spot prices are poised for a sustained upward increase in 2024. While I do expect seasonal tightening as we approach Labor Day and especially Thanksgiving and Christmas, the demand conditions just aren’t there for the type of sustained increase in spot rates that are needed to bring on a bull market pricing cycle. #supplychain #supplychainmanagement #freight #trucking #transportation

Dry van truckload rates have been showing the strongest momentum we have seen in 4 years. Two charts below and some thoughts about implications for 2025: •Top chart shows DAT Freight & Analytics dry van truckload spot rates including fuel, with the last data point showing January’s spot prices. Rates are now up $0.17-$0.18 per mile since November. If things end where they are, this will be the best January since January 2018. •Bottom chart shows the dry van spot market cycle indicator, which is calculated using DAT’s data for (contract – spot) / ((contract + spot)/2). Historically, anytime that ratio falls below 10%, it is the harbinger of a bull market. January’s data places that metric at ~11.2%. •Before folks get too excited, it’s important to remember that this January has been brutal from a weather standpoint (with next week featuring the coldest temperatures yet). Back in January 2024, spot rates jumped because of weather (albeit much less than in January 2025) but fell sharply in February. Consequently, my current view is that we won’t truly know whether a bull market has fully commenced until we see what spot rates do in February. If spot rates would rise in February, then this would be a sign that the market has indeed turned. •Another metric I’m closely watching is tender rejection rates. Currently, FreightWaves has that metric around 8%. That isn’t yet the type of reading that suggests routing guides are completely failing. Implication: 2025 is starting off looking quite strong for dry van TL carriers from a pricing standpoint. However, given how bad the weather has been this January, it’s premature to declare that the bulls are truly running. If we maintain current spot pricing in February and start to see further upward movement in March, then we will be in a position to declare the next upward pricing cycle has commenced. #supplychain #supplychainmanagement #freight #trucking #truckload 

Great data, true data, but what it actually show? The Disconnect Between Necessary (real) Rates and the Reality of the Trucking Market. The trucking industry today reveals a disconnect between necessary rates and actual market conditions. Here are the minimum rates needed to cover operational costs: Dry Van: $2.56–$2.78 per mile Dry Van with Hazmat: $2.76–$2.98 per mile Reefer: $3.06–$3.28 per mile Reefer with Hazmat: $3.31–$3.53 per mile These rates reflect costs demanded by customers, brokers, regulators, taxes, fees, and compliance standards. Yet, actual market rates often fall short, creating instability and financial strain. The Market Reality What we see today is not a natural market but one shaped by suppressed rates, leading to bankruptcies and driver shortages. This creates cycles of unsustainable lows followed by sudden rate spikes during capacity shortages. Key issues include: Low rates driving companies out of business. Driver shortages as older drivers retire and younger generations avoid the industry. Volatile spikes in freight rates during capacity crunches. This instability undermines the logistics ecosystem, disrupts supply chains, and increases costs for all stakeholders. Attracting the Next Generation The trucking industry faces a talent crisis. Young drivers are deterred by: Low wages and unpredictable earnings. Poor work-life balance. A volatile market that offers little stability. Without significant changes, the industry risks losing its future workforce. A Natural Market Based on Cost Benchmarks To ensure sustainability, minimum cost-covering rates must serve as the baseline. Natural market adjustments should then drive rates upward. This approach will: Stabilize the industry, preventing bankruptcies. Attract new drivers by offering fair earnings and conditions. Support economic growth with reliable logistics operations. Necessary Changes Stakeholders must: Adopt cost-based pricing that reflects true operational costs. Improve driver conditions to attract and retain talent. Advocate for fair competition policies to prevent predatory pricing. Margins Matter Trucking companies need profit margins to grow: 1% Profit: Bare survival. 3-5% Profit: Basic sustainability. 7-15% Profit: Healthy growth and reinvestment. The trucking industry is the backbone of our economy. By aligning rates with costs and ensuring fair margins, we can build a stable and sustainable future. It’s time for stakeholders to collaborate and drive meaningful change—the future of logistics depends on it.

Trucking industry and brokers need to understand this dynamic of capacity & rates and plan ahead as this soft market conditions for most part are likely to continue well into the new year 2025. This is undoubtedly a painful, deep and long freight recession in OTR sector..We also understood that increasing imports and TL volumes don't have direct correlation. This is likely to impact muted deal flow in this space for longer time. US job market and inflation data don't create any urgency for Feds to back down on interest rates, when they actually do start cutting rates, it's going to be a gradual process. If you are a trucking company or a transportation broker, give yourself more time and prepare for next 6-12 months of financial prudence and improved working capital so you survive for the next growth cycle.

Freight activity showed signs of stabilizing in September, with truckload rates flattening. Do you think we're seeing the beginning of a freight market rebound, or is further volatility on the horizon? Share your thoughts! #RDSCapacitySolutions #Trucking #Transportation #FreightTrends #Logistics

Unfortunately the market hasn’t opened up like we thought it would at this point but carriers are resilient and we will get through this once again. While the outlook for the remainder of the year is not the best, hoping it will change when we get through this election period. How do you think the results of this critical election will impact the industry?

March Freight Metrics Hold Steady, Cass Data Shows 📉🚚 📢 The latest Cass Freight Index data for March is in, and here's what it reveals: 📦 Shipments and expenditures for March were relatively flat compared to February, falling short of typical seasonal trends. Shipments were down 2.3% from February and 3.6% from the same month last year, while expenditures dipped 1.3% from February and a significant 18.5% year-over-year. 💸 Actual rates were down 15.4% year-over-year, reflecting a continued downward trend in freight spend. However, there's a glimmer of hope as Cass anticipates a positive volume inflection by June. 📉 Despite the challenges, there's some resilience in the truckload linehaul index, which saw a slight increase of 0.2% sequentially. This suggests that downward pressure on contract rates is easing, with some instances of rate increases observed recently. 📊 The data signals a cautious start to the first quarter, with analysts revising expectations for the earnings season. However, with Cass processing billions in freight payables annually, these insights provide valuable guidance for navigating the current market conditions. Stay tuned for more updates as we continue to monitor the pulse of the trucking industry! 🛣️💼 #TruckingNews #FreightMetrics #CassFreightIndex #TruckingIndustry #TruckingLife #StayInformed

Now that December’s in the books, I wanted to look at the behavior of dry van truckload spot prices. Two charts below using data from DAT Freight & Analytics, including fuel. Thoughts: •Top chart shows DAT’s try van TL spot rates back to January 2017. Spot rates for December 2024 were identical to December 2023, but with fuel down $0.48 a gallon from a year ago (https://lnkd.in/gKQs9Kv7), this translates to an increase in an inferred linehaul rate. This said, with fuel, spot rates have been moving sideways since May 2023. This prolonged period of weakness mirrors what we observed in 2015-2016.    •The bottom chart shows the month-over-month change in $/mile for December from November for each year back to 2013. 2024 shows one of the strongest seasonal gains, lagging only 2019. This certainly is consistent with a return to more normal seasonal pricing fluctuations. •Regarding how January will shape out, we have already seen FreightWaves’ outbound tender rejection index fall back below 7% after a rapid increase right before Christmas (as to be expected). The December ISM PMI data on manufacturing new orders, while in expansion, was just 52.5, which is generally below levels we need have confidence a truckload bull market pricing cycle is coming (readings of > 55 are what we want to see). Implication: the return to more normal seasonal conditions in the dry van TL sector indicates the balance of supply and demand is much more aligned than a year ago. I continue to believe we are a few months away from the possibility of a true bull market pricing cycle commencing, as we need to see a larger pick up in domestic manufacturing activity. Economic policy uncertainty regarding potential tariffs isn’t helping in this manner, as clearly conveyed by informants’ responses to the latest Dallas Fed Manufacturing Survey from December (https://lnkd.in/gNBKt8vv). I continue to believe we could see the market meaningfully turn starting as early as March or April so long as massive tariff increases don’t occur. #supplychain #supplychainmanagement #freight #trucking #truckload