The mild freight downturn is likely to persist as banking crises fray nerves and the retail destock progresses, and restocking is unlikely for a while. The truckload spot market is bottoming as labor capacity slows, according to the latest release of the ACT Freight Forecast, U.S. Rate and Volume OUTLOOK report.

Tim Denoyer, ACT Research’s Vice President and Senior Analyst, said, “What a difference a year makes. Some of the truckload spot market’s deepest roots are in western produce markets, and after one of the worst droughts in history over the past three years, weather patterns are much different this year. There could be a slow start to California produce season due to flooding damage in some places, but the outlook for the western growing season is vastly better than the past few years.”

“Reservoirs are filling and snowpacks in California are near record levels. The stark contrast in the US Drought Monitor from last year to current conditions clearly shows western fruit and vegetable produce volumes are likely to be significantly higher this year as the wet season has brought some much-needed relief. This should gradually boost reefer spot loads as overall spot capacity is contracting. We see this as a key part of the formula for rates to bottom in the near term.”

He added, “At cycle bottoms, the inflection can center around driver capacity, which has slowed sharply recently. As 2023 progresses, we expect driver demographics, drug testing, and low spot rates to increasingly shift the market balance.”

Denoyer concluded, “The decline in DOT operating authorities that started in October 2022 is more evidence of progress in the bottoming process. The truckload driver population has nearly stopped growing and we think it will start to contract year over year by second half of 2023, setting up the next driver shortage. We’re not there yet, but BLS trucking employment in February was slightly below last August.”