There are a couple of ways for a transportation company to play the freight market ‘after the peak,’ depending on the customer portfolio.
Carriers and brokers with business concentrated in food and beverage – commodities enjoying a period of extraordinary demand – might be tempted to raise rates on their customers to protect themselves against unpredictable spot markets and purchased transportation costs.
On the other hand, a defensive play would be to communicate with customers and try to lower or maintain rates where possible to hold on to contracted freight in the anticipation of asset-based carriers lowering their rates as they begin to manage for asset utilization rather than yield.
Transportation companies are placing their bets on a customer-by-customer basis according to what their business relationships will bear and their projections about freight markets, but we heard from multiple sources this week that small carriers hauling spot freight are beginning to capitulate on rates (see our ‘Rates’ section below).
For us, it’s an early signal that capacity may loosen and drive down rates even for the most defensive food and beverage and consumer staple freight as carriers try to keep their trucks moving.
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