Paul Berger of The Wall Street Journal tells his readers that industry analysts say many trucking companies are barely clinging on as freight rates are in retreat, thanks in part to earnings they tucked away during the pandemic. He writes:
A push by retailers and manufacturers to cut shipping costs is sending trucking industry hopes of an earnings rebound into a skid.
Freight rates have been retreating for much of the year in the trucking sector’s spot market. Analysts and industry executives say longer-term contract prices are also declining as shipping customers focus on keeping inventories lean and logistics spending tight.
DAT Solutions, a load board matching trucks to shippers, estimates the average contract rate of $2.47 per mile in April is 17 cents behind the year-ago level. Average rates in the spot market have fallen 6.5% since the start of the year, according to the DAT figures.
Paul Svindland, chief executive of STG Logistics, a privately held logistics provider based in Bensenville, Ill., said his company is lowering contract rates by “low single digits” this bid season just to maintain the freight business it had in 2023.
“The floor keeps getting lower,” Svindland said. […]
Some trucking executives believe there are still reasons to be hopeful.
STG’s Svindland thinks operators have reached the floor for rate reductions. William Mahoney, chief commercial officer at NFI Industries, a Camden, N.J.-based trucking and logistics provider for major retailers, said he believes the industry has entered a recovery phase. “It just may take us six months to get there,” he said.
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