Recent Increase in Key Metric Helps Carriers Avoid Further Downturn
Truck Contract Rates Rise Ahead of Peak Season
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A key indicator has shown some growth recently as carriers aim to avoid further declines.
Published on October 11, 2024
### Key Highlights:
* According to DAT, new truck contract rates as of September 22 have risen by 1% compared to previous contracts, which could be a sign of improvement following a two-year freight downturn.
* Chad Kennedy, Product Manager at DAT Freight & Analytics, mentioned in the weekly market update that this metric, known as the new rate difference, has occasionally been positive over the past year or so.
* “It might stick around for a while and then drop off,” said Kennedy. “We’ll have to wait and see. We’re keeping an eye on it to see if contract rates continue to rise.”
### In-Depth Insights:
Analysts and executives have noted positive changes in the market over recent months, with disruptive hurricanes adding pressure to the southeastern region.
Derek Leathers, CEO of Werner Enterprises, stated at Morgan Stanley’s 12th Laguna Conference in California last month that carrier contract rates need to increase to reflect inflationary pressures and the threat of rate cuts.
“We believe rates will have to go up during the 2025 bid season,” said Leathers. “The question is how much, which will largely depend on capacity reductions and the overall economic situation.”
Meanwhile, another key indicator, the spot premium ratio, shows that spot rates continue to be below contract rates and are under downward pressure, indicating a weak market, according to Kennedy.
“We’ve been in a weak market for just over two years,” he said.
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Source: Supply Chain Dive
