Freight Market Showing Signs of Stabilization

In the third quarter of 2023, the North American freight market is undergoing significant changes. The first half of the year was marked by an oversupply of capacity, leading to low truckload spot rates, but signs of stabilization are emerging. Yellow, a troubled less-than-truckload carrier, faces financial difficulties and the possibility of a Teamsters union strike. The union is also negotiating with UPS, raising concerns about potential strikes in August. FedEx pilots rejected a contract amendment, and West Coast ports have experienced disruptions.

The Q3 2023 Freight Sentiment Indexes reveal a shift in the market. Shippers, who benefited from pricing power due to excess capacity, have become less positive, with their sentiment decreasing from 10.56 to 8.32. In contrast, carriers and brokers are more optimistic in Q3. Carriers’ sentiment has improved from negative to positive, driven by their confidence in future profitability. Brokers and 3PLs are also more positive, especially about future earnings.

The potential bankruptcy of Yellow and a strike at UPS could disrupt the market but may provide opportunities for carriers and brokers to secure higher rates and expand their businesses. However, it’s important to note that not all carriers are equally optimistic, and the market remains dynamic and unpredictable.

Shippers are experiencing a decrease in positivity, potentially losing some pricing power due to changing market conditions. They face challenges in finding alternative freight services at potentially higher rates if Yellow or UPS disruptions occur. Additionally, concerns about inventory levels and future demand impact their near-term profitability outlook.