The quiet before the storm of the holiday season.
Freight rates have encountered another slight decrease similar to what happened in October. Here are the DAT numbers.
November 2022 Numbers
- Dry van decreased another four cents to $2.38 per mile.
- Flatbed, like the month prior, dropped four cents. It is now averaging $2.83 per mile.
- Reefer rates stood stagnant at $2.80.
- The average is now $2.67, a decrease of three cents.
What is the explanation for this phenomenon? Conventional wisdom would say that demand increases during the start of the holiday season, and freight rates increase to accommodate.
One theory is that the slight downturn in demand is not from consumers, but rather retailers. In the news there has been massive talk of abundance in inventory, and as such retailers are trying to sell what they already have on the shelves before placing more orders.
Another cause for the increase is the record sales of trucks and trailers the industry has been experiencing as of late. Fleets have been chomping at the bit to get their hands on trucks and trailers to increase their business capacity, and now because that is finally happening, more supply in the trucking industry is exerting a minor downward force on prices across the board.
The data mirrors this: in November 2021 the freight rate average was at its all-time high, when fleets were struggling to get enough trucks and drivers for delivery. This market correction is not yet a cause for concern.
While November is home to Black Friday and other various deal days for consumers to purchase goods, November only has a few days in it that can really be considered part of the holiday season. December’s freight rates will be a better indicator as to whether or not current market trends are stronger than the increased demand that comes at the end of the year.
While freight rates are slowly letting off steam, other indicators in the trucking industry (such as tonnage) remain strong, and as such we remain positive for the future of the next year to come, 2023.
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