The freight industry has experienced growing pains throughout the last two years, with volatility being at the forefront of these issues. Unlike the everpresent pendulum of industry trends, 2020 brought a large amount of uncertainty considering our modern day market had never faced the challenges of a worldwide pandemic. What was clear following the initial 6 months of lockdown was that trucking carriers were in the metaphoric driving seat when it came to power in the industry. Shippers were desperate to have their freight delivered and were willing to pay any price, which carriers certainly took advantage of. Whether contracted or secured via the spot market, freight was becoming more expensive to move as time moved on. Contracts found it difficult to provide reliable capacity consistently, which has shippers flock to the spot market. As carriers’ capacity was becoming increasingly invaluable, they were given the ability to name their own rates. Historically speaking, this is not out of the ordinary. When examining the trends of the freight industry, there is always a position of power filled by either shippers or carriers, with aptly named monikers of a ‘shippers’ market’ or a ‘carriers’ market’. However, the last 100 years of trends and data cannot truly encapsulate what the past two years have been or where they are leading into. Market volatility is still recovering from an all time high, one that has yet to completely settle. Where carriers once held the power to name their rates, we see the needle pushing back in the other direction. We may very well be at a point where shippers tip the power scale and put themselves in the driver’s seat of the freight industry. What this entails is less volume being shipped, which leads to an inverse bidding war for carriers. Where capacity was once king, it is now not as hot of a commodity, and shippers receive favorable pricing as carriers bid lower rates in order to secure loads.
As the freight industry pendulum swings toward a shippers’ market, carriers will flock to lower rates in the pursuit of inverse bidding wars on loads where the lowest offer will likely win. What this means for carriers is more competition and less room for profit, and without the guidance and management of applied technology internally or from a 3PL, will present further challenges as the pendulum swings back.