- Werner Enterprises forecast spot freight rates will bottom in Q2 and begin to improve in the second half of the year.
- CEO, President and Chairman Derek Leathers suggested the market stabilized in April, but he cautioned how much credence the company placed on the apparent low point.
- “I think we've seen the worst of spot,” Leathers said on the carrier’s earnings call Thursday. “And now the question is just how long it goes sideways before it goes up.”
The possible long-awaited trough of the freight market cycle comes at a difficult time to gauge.
Dry van spot rates have fallen in recent weeks, continuing a downward trend since January 2022, but DAT Principal Analyst Dean Croke said Tuesday that they finally came to a halt last week.
But he noted a complicating factor that makes it unclear whether the nadir in spot market rates is here.
"Whilst this could be the bottom of spot rates we've been waiting for, it could also be temporary following the end-of-month surge that we typically see from shippers,” Croke said Tuesday on a weekly market update show.
What has been clear is the number of deactivations of interstate trucking businesses. Starting last September, those departures have exceeded activations for 31 consecutive weeks, Leathers said. Referencing Federal Motor Carrier Safety Administration data, he said net deactivations surpassed 80,000 trucks over a seven-month period.
Multiple publicly traded carriers have said spot rates have become challenging for many smaller businesses. Marten Transport Executive Chairman Randolph Marten said in an earnings statement April 18 that the market has become unsustainable for smaller carriers.
“With the continued decline in spot rates, the shortfall between small carrier operating costs and spot freight rates has grown to over 15%,” Werner CFO, Treasurer and EVP John Steele said on the earnings call. “This is leading to carrier failures in greater numbers and will result in an opportunity to focus on yield improvement.”