Index indicates pricing leverage shift in favor of carriers

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Online freight matching service Internet Truckstop’s real-time Market Demand Index (MDI) exceeded 7 the last week in February, marking the first time since July 2008 that the MDI rose above 7. The MDI measures relative demand for available trucks in the market. An MDI below 7 indicates pricing leverage resides with shippers or freight brokers, while an MDI higher than 7 indicates pricing leverage in favor of motor carriers.

“Since August 2008, the long-haul trucking industry has clearly been in a broker/shipper market from a rate negotiation standpoint, but that is quickly changing,” says Joel McGinley, an executive consultant for Internet Truckstop. “Load availability and truck demand are going to continue to increase, and I would not be surprised to see the MDI reach double digits by the summer.”

McGinley says returning demand in the freight market is due to increasing freight tonnage and fewer trucks in the market. “Truck capacity began to decline in August of 2007 and has continued since then,” he says. “This strengthening of demand should help to stop the overall loss of capacity and should help to improve the overall freight rates.”