This document contains our comprehensive outlook for national dry van and reefer truckload rates for November 2022 through December 2023. The Arrive Insights® team generated this forecast through a combination of extensive historical research and output from the predictive models built into ARRIVEnow, our proprietary technology platform.
Successfully navigating freight market ebbs and flows begins with a basic understanding of the relationship between rates and the unique components of truckload supply and demand. Simply put, high or increasing demand and tight capacity will cause upward rate pressure, whereas low or easing demand and ample available capacity will drive rates down.
By tracking directional trends for truckload demand (volume) and available capacity (trucks) in the market at any given time, we can predict rate trends with a high degree of accuracy and consistency.
Overall, rate movements have aligned with the first forecast we released in October 2022 and the update published in Q1. Rates trended closer to the downside range of the forecast in Q2 due to persistently soft spot market demand and stubbornly sticky truckload capacity.
Coming into 2023, we anticipated rates would bottom out in April, and while that may have been the case from a week-to-week perspective, van spot rates actually fell slightly below April in May. Normal seasonality has since returned, also in line with our expectations.
Looking ahead, downward pressure on contract rates will persist as the economy and truckload demand normalize toward pre-pandemic levels. Excess capacity accumulated over the last few years is beginning to unwind. For now, though, it remains sufficient and should drive a prolonged period of spot market equilibrium and deflationary contract rates as the gap between the two closes.
Our Q1 update forecasted van spot rates would fall through Q2, bottoming out in April and remaining low in May ahead of the summer peak season. Soft spot demand and a well-supplied capacity market enabled that prediction to play out. However, rates trended toward the low end of the forecasted range, indicating that the greater downside risk scenario unfolded.
Average deviations in our forecasted rates relative to the actual rate of -$0.02 and $0.01 in February and March grew to $0.05 and $0.07 in April and May as rates fell more quickly than anticipated. Directionally, rates moved in line with our forecast, except for May. We predicted a slight increase due to the impact of CVSA Roadcheck and the onset of the summer peak season ahead of Memorial Day. However, softer-than-expected conditions in early May were too much for the elevated rates to overcome later in the month.
Spot rates are typically negotiated as all-in rates, so rapid fuel price fluctuations can contribute to forecast deviations. For example, following a $0.14 per mile decline from November to February, the average fuel surcharge declined by $0.11 per mile from February to June, likely leading to some linehaul forecast volatility. Fuel prices have since stabilized, hopefully allowing for more steady and predictable spot linehaul rates in the future.
At the beginning of March 2023, DAT reported a February van contract rate of $2.33 per mile, excluding fuel. That number adjusted to $2.30 per mile, excluding fuel, as the month went on. Though such adjustments are not uncommon in DAT data, ones of this size are, and it shifted our contract rate baseline by $0.03 before the forecast even went live.
With that in mind, we recommend reviewing the monthly predicted rate movements when using this forecast for planning purposes. For example, we forecasted contract rates to fall between $0.04 and $0.14 per mile, excluding fuel, from February to May, with a decline of $0.09 per mile being the most likely scenario. The actual rate decline was $0.13 per mile, meaning our forecast was within $0.04 per mile of actual contract rate movements. Directionally, rates moved in line with expectations, falling each month.
Reefer spot rates followed a similar trend to van spot rates over the last quarter. Similar to our updated Q1 van forecast, we predicted reefer spot rates would fall through Q2, bottoming out in April and remaining low in May ahead of the summer peak produce season. As expected, rates trended closer to the downside risk scenario due to soft spot demand and a well-supplied capacity market.
Average deviations in our forecasted rate relative to the actual rate remained low, trending at $0.01 in March, $0.03 in April and $0.04 in May as rates fell slightly lower than anticipated. Directionally, rates moved perfectly in line with our forecast, bottoming out in April before a slight increase in May with the onset of the summer peak season late in the month.
DAT reefer contract rates shifted similarly to van contract rates in February, so the same baseline adjustment rule applies here. We forecasted contract rates would fall between $0.02 and $0.10 per mile, excluding fuel, from February to May, with a decline of $0.06 per mile being the most likely scenario. Directionally, rates moved right in line with expectations, falling each month. However, the actual rate decline was $0.11 per mile, meaning our forecast was within $0.05 per mile of actual contract rate movements. This result illustrates an environment where shippers have been quickly and aggressively lowering contract pricing on reefer freight at a time when we would expect to see seasonal demand lead to more stable rates.
We anticipate spot rates will remain relatively stable, rising and falling in line with typical seasonal expectations, as contract rates continue to normalize and the gap between the two gradually closes throughout the year.
The capacity correction is underway, but it will be some time before the market becomes vulnerable to longer-term disruption.
Freight tonnage is unlikely to give trucking conditions a meaningful boost and continues to experience greater downside risk as economic conditions normalize toward pre-pandemic levels.
The Russia/Ukraine conflict significantly impacted freight markets in 2022 and remains a large risk in 2023. Similarly, tensions between China and Taiwan may impact Asia-U.S. relations and trade, including Taiwan’s prominent semiconductor production.
We accounted for current economic conditions and the prospect of a late 2023/early 2024 recession in this forecast. However, conditions may worsen faster than expected, resulting in declining trucking demand due to dwindling consumer demand and manufacturing pullbacks.
Severe weather is a frequent source of freight market disruption. Though winter storms tend to have the greatest impact, healthy capacity should help mitigate any significant issues if major weather events occur.
Spot rates are below public truckload carriers’ operating cost per mile for the third consecutive quarter. When this occurs, it usually isn’t long before spot rates rebound or experience some upward pressure because rates can only fall so far before carriers start to lose money and decide to sit out or leave the market entirely. This scenario creates a floor for rates and is why our forecasted spot rates typically trend to the downside.
Rapidly changing fuel surcharges can make measuring forecast errors more complex. They can also create different behavioral profiles for shippers and carriers in the marketplace. For example, rapidly declining fuel costs drive more favorable conditions for carriers and alleviate pressure on shippers looking for cost reductions. Historically fuel prices have remained relatively stable, but over the past year, we have redefined what fuel price volatility looks like.
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Matt Pyatt is the Chief Executive Officer of Arrive Logistics. He co-founded Arrive with President Eric Dunigan in 2014 after building his career at Command Transportation. As CEO, he is responsible for overseeing the company’s financial health, strategic vision and culture, as well as building a scalable leadership team to support Arrive’s growth.
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Scott Sandager is the Chief Administrative Officer at Arrive Logistics. He joined Arrive in 2018, bringing over 14 years of logistics and brokerage experience, with expertise in project and change management, organizational design, talent development and customer satisfaction. Scott previously held many diverse roles of increasing responsibility with AFN, a Chicago-based freight brokerage.
Eric Dunigan is the President of Arrive Logistics. He began his career at Command Transportation before co-founding Arrive with Matt Pyatt in 2014. As president, he is responsible for driving revenue and growth, as well as leading the Strategic Partnerships team — a veteran group of supply chain experts who work with Arrive’s customers to reimagine their shipping strategy.
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David Spencer is the Vice President of Market Intelligence at Arrive Logistics. David joined Arrive in 2017 after spending six years at AFN focused on business intelligence. His department provides critical market data and expert analysis to internal teams and publishes monthly market updates for shippers and carriers under the Arrive Insights banner.
Andrew Clarke is Board Chairman for Global Critical and DCLI, Inc., and a board member for Arrive Logistics and Element Fleet Management Corp. His 20 years of global transportation and logistics experience include time as CFO of C.H. Robinson, CEO of Panther Expedited Services, Inc. and SVP and CFO roles at Forward Air Corporation.
Dean Croke is a Market Analyst at DAT Solutions, where he focuses on freight market intelligence and data analytics. His 35 years of experience with data analytics, transportation, supply chain management, mining and insurance risk management include time as co-founder of FleetRisk Advisors and in a number of other high-level roles with FreightWaves, Spireon, Lancer Insurance, Omnitracs Analytics (formerly Qualcomm) and more.
Asanka Jayasuriya is the CTO at 8VC. He is an accomplished engineering and product leader with 20+ years of experience in the cloud. He has a strong background in enterprise SaaS, PLG products, infrastructure, and security. Notably, he served as CTO and SVP of Engineering at SailPoint, leading their successful transition to the cloud and successful exit event. He also held senior leadership roles at InVision, Atlassian, and Amazon, driving growth, operational excellence, and innovation. At 8VC, Asanka works with the entrepreneurs and leaders in our portfolio as a virtual CTO supporting their growth.
Chad Eichelberger is the President of Reliance Partners. Since 2015, he’s leveraged his extensive experience in risk management, compliance, best practices and contracts to lead the company’s logistics and truck insurance strategy and operations. Chad was previously the President of Access America Transport, where he led the company from $8M to over $600M in revenue.
Barry Conlon is the CEO and founder of Overhaul, the global leader in active supply chain risk management and intelligence. With a remarkable career spanning over 30 years in supply chain security, he is widely regarded as a trailblazer in modern-day supply chain security standards and best practices.
As VP and Senior Analyst at ACT Research, Tim analyzes commercial vehicle demand and alternative powertrain development (i.e. electrification), and authors the ACT Freight Forecast, U.S. Rate and Volume Outlook. He previously spent fifteen years in equity research focused primarily on the transportation, machinery, and automotive industries, and co-founded leading equity research firm Wolfe Research.
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