If your business relies on trucking, then you’ll want to know the current state of the industry. You can’t assume that things will stay the same this year as they were last year. Understanding 2023 trucking projections will help you make smart shipping decisions and save money where possible.
Trucking Projections for the Spot Market
The spot market doesn’t look much like it did a year ago. Early 2022 was a time of incredibly high trucking demand and prices to match. The tides turned in the second half of the year.
Most industry experts paint early 2023 as a bit of a rough period for the trucking industry. The market might even out by the end of the year, but truckers may grapple with decreased demand for the first several months.
Has that prediction been playing out so far? Yes, there’s been a good deal of slowing in the market. According to DAT Trendlines:
- Week over Week: For the week of February 20 to 26, 2023, spot load posts were down 8.9% from the week before (February 13 to 19).
- Month over Month: Spot load posts dropped 27.4% in February compared to January.
- Year over Year: Compared to February 2022, spot load posts were 73.8% lower in February 2023.
In general, spot prices have been falling for several months in a row. From December 2022 to March 2023, flatbed rates have dropped each month, going from $2.77 per mile in December to $2.69 in March.
Reefer trends have been similar, but the drop has been more dramatic. The rate was $2.83 in December and down to $2.51 in March.
Van rates have been the slight exception. The cost is still lower than it was a few months ago — $2.42 in December and $2.37 in March — but there was an increase between February and March.
Overall, there’s an unusual dynamic at play in the current truckload market. Spot rates are generally lower than contract rates. Industry projections suggest that this trend will continue for at least a few more months.
The same goes for the decline in rates. By the second half of the year, though, there may be an increased demand for trucking services, and rates may stabilize.
Driver Capacity Trucking Projections
Truckloads of goods don’t get anywhere without drivers. When driver capacity is strained, you may have a hard time getting your loads picked up.
Recently, the American Trucking Association reported that there were about 3.5 million truck drivers in the US. That’s a large number, but it’s still not quite enough to meet demand.
In 2022, the industry was short about 78,000 truck drivers. Estimates predict that new hires will come on this year to help relieve some of the shortage. By the end of 2023, there may be only 65,000 to 70,000 unfilled positions.
With a low unemployment rate across the country, though, the trucking industry will be competing with many others for labor.
Pay rates for drivers have been increasing in an attempt to recruit or retain more workers. For example, the average compensation package for truckload drivers was 18% higher in 2022 compared to 2019.
Higher pay doesn’t always solve capacity issues, though. Sometimes, it means that truckers opt for a tradeoff that allows them to be home more. They opt to keep their paychecks the same by driving fewer hours each week.
With all that in mind, what’s the current state of OTR driver capacity? Looking at current spot truck posts from DAT could provide clues:
- Week over Week: There was a 3.1% drop in posts from the week of February 13-19 to the week of February 20-26.
- Month over Month: From January to February, there was a 17.4% drop.
- Year over Year: In February 2023, there was an increase of 6.4% compared to one year prior.
The LTL market is one to watch for sure. In a recent Logistics Management survey, about half of the respondents said that booking LTL services is sometimes a challenge.
However, there have been shake-ups in the industry over the last year or so, and more may be on the horizon. For instance, Knight-Swift has purchased a few regional LTL lines and may turn them into national players, which could affect overall LTL capacity. Rumor has it that other carriers may be looking into LTL expansion as well.
On the other hand, decreasing profit margins may drive some truckers out of the industry. A FreightWaves survey indicates that over 35% of owner-operators may quit if economic trends don’t change soon. They report seeing increased costs without an increase in revenue. This is another trend to keep an eye on since it has the potential to decrease driver capacity.
How to Respond to Trucking Projections
What do these trucking projections mean for you?
Currently, you may be happy to see the declining trend in spot rates. Projections suggest that this won’t last forever, though.
Plus, lower rates mean that trucking companies may be operating with tighter margins. The effects may be passed on to you — for example, through increased surcharges.
In addition, current driver capacity trends may influence how much you pay to move your truckload or LTL shipments in a timely fashion.
Rather than sitting back and waiting to see what the market brings throughout 2023, it makes sense to be proactive about your shipping costs. Partnering with aa post audit company will help you identify overcharges and could also reveal areas where you’ll be able to save money in the future.
Trans Audit for Cost Recovery
With these trucking projections in mind, you may be eager to cushion yourself against possible rate increases in 2023. Trans Audit is the global leader for transportation post audit services for all modes of transportation. Contact us to learn more about how we can partner with your company in 2023 and beyond.