Indicators: Spot market rates outpacing contract rates since recession, rates lag market by several months

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Updated Aug 31, 2016

CCJ’s Indicators rounds up the latest reports on trucking business indicators on rates, freight, equipment, the economy and more.

truck-at-dockFTR, in conjunction with, released three truckload pricing insights last week based on joint research conducted between the two companies.

For starters, FTR’s research shows spot market rates have climbed faster than contract rates since the bottom of the Great Recession, growing 2 percent quarter over quarter on an annualized basis. Contract rates have grown just 1 percent quarter over quarter since the recession’s bottom. FTR’s Noel Perry, however, says he expects the trend to continue until 2019.

Secondly, and obviously, spot market rates are more volatile than contract rates, FTR notes. “The spot market is defined as the home of swings in random demand,” Perry says. “The standard deviation of spot rate changes since the bottom of the last recession is five times larger than that of contract rates.”

Lastly, changes in both spot market rates and contract rates lag behind market pressures that tend to change rates. The rate-change lag is usually about a quarter for spot market rates and longer for contract rates, FTR notes. “The response is not instantaneous because truckers and shippers take time to realize that a change is required,” Perry says. “There are also some small delays in the statistics.” More modern pricing tools and access to big data, says FTR, should help tighten the gap between market changes and carriers’ rates adjustments.