Q3 2024 Truckload Market Forecast: Spot & Contract Freight Rate Trends

In our last quarterly update, the Coyote Curve^® continued to climb out of the deepest trough in the index’s history, and was dangerously close to breaking back into inflation.

The Q3 numbers are in — we have crossed the threshold and entered into an inflationary market.

At long last, we can say “so long” to cycle five, and usher in cycle six. But what does that mean for shippers and carriers? Will the back half of 2024 bring volatility to the market, or will it be a continuation of the first half?

We’ll tell you everything you need to know about the past quarter and what to expect throughout Q3 in the latest truckload market guide.

Q3 Truckload Market:
The Complete Guide for Logistics Pros

• Q2 trucking spot & contract rate recap
• Economic outlook: indicators that drive freight demand
• Trucking trends impacting the market
• Q3 truckload market forecast
• Watch the webinar

New to the Coyote Curve? 

These essential truckload market resources will give you foundational industry knowledge and teach you how how we build our proprietary spot rate index.

Q2 2024 Spot & Contract Trucking Rate Recap

In Q2, after four straight quarters of climbing out of the trough, the Coyote Curve passed the equilibrium (0%) mark and went back into Y/Y inflation, in-line with our prediction.

While produce season, Memorial Day, DOT week and 4th of July preparations all led to some incremental rate bumps and mild volatility, overall conditions remained relatively stable — neither shippers nor carriers likely noticed a massive impact to pricing or capacity.

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Q2 truckload spot rates finally flipped inflationary
Truckload spot rates finished Q2 at 3.0% Y/Y, up from -3.3% in Q1.

Q2 truckload contract rates trended closer to inflation
Truckload contract rates* trended upwards to -2.7%, up from -5.3% Y/Y in Q1 2024.

Typically contract rates will lag spot rate activity by two to three quarters, but the turn happened faster in this cycle, lagging by only one quarter. This was driven by record decreases in contract rates — there was just not any further down to go.

Actual Spot Truckload Rates vs. Y/Y

To build further confidence in the Coyote Curve (a Y/Y spot rate index), let’s see it up against our proprietary all-in cost-per-mile index — this is comparing annual change versus the actual rate.

(As a reminder, these numbers are informed by real transactional data from thousands daily shipments spanning over 17 years.)

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If you feel like the market has been stagnant, you’re not wrong. After increasing in Q3 2023 for the first time in a year-and-a-half, our all-in index has remained flat for four quarters in a row.

Though the cost-per-mile index is also off the bottom, it’s still only hovering around levels from the 2014 peak.

That means, in absolute terms, carriers are currently getting similar spot rates to nine years ago, though their operating costs (diesel, insurance, labor, etc.) have increased substantially. Simply put, there is no room for rates to drop, as many carriers have been running at unsustainable levels.

With continued attrition in the carrier market, it’s likely we’ll finally see this index head up as well in the coming quarter.

The cycle is dead. Long live the cycle.

With the close of Q2 came the close of the fifth truckload market cycle in our observed history and the start of the sixth.

And what a wild cycle it was. It started way back in the pre-COVID era.

In late 2019, we were prepared for another seemingly routine cycle — then the world went into lockdown. A sharp downturn in Q2 2020 was followed by the biggest surge in truckload shipping we’ve ever seen.

Unfortunately, the old adage proved true: the higher they rise, the farther they fall, and we sank into a deep freight recession that took two years to climb out of. Whether shipper, carrier or 3PL, it’s safe to say the entire industry is hoping for a little less volatility in cycle six.

Let’s look at cycle five by the numbers:

• It was tied for the longest cycle
  At 17 quarters, cycle five was tied with cycle 3 at 17 quarters from start to finish, compared to an average cycle length of 12.8 quarters.
• And hit the highest peak
  Cycle five capped out at 68.1% Y/Y in Q2 2021, which smashed the previous record of 39.4% (set in Q1 2018) by 28.7%.
• And the lowest trough 
  Cycle five dropped to -38.4% Y/Y, beating the previous record of -24.9% (set in Q2 2019) by 13.5%.
• And was the most volatile
  Obviously, it also had the biggest amplitude from peak to trough at 106.5%, compared to 64.3% in cycle four.

Q2 2024 Truckload Market Recap

The Coyote Curve (measuring Y/Y change in spot rates) continued its upward climb for the fifth straight quarter, though all-in rates (actual amount paid to carriers) remained flat for the fourth straight quarter.

We are finally back in an inflationary rate environment, though Q2 was still, largely, a shippers’ market.

Carriers remained under significant cost pressure, while shippers enjoyed high tender acceptance, easy capacity and another round of rate decreases in their RFPs.

Key Economic Indicators Driving the Truckload Market

Halfway through 2024, the economy isn’t receding, but it isn’t roaring back either.

This relative stagnation across macroeconomic indicators means depressed truckload volumes, which have slowed down a freight market recovery.

It’s worth noting that though the truckload market is linked to what happens in the wider economy, it is not always coupled (see the inflationary Curve in 2008 during the Great Recession).

Given how supply and demand work in the truckload market, it’s possible for the economy to remain strong and the truckload market to languish (and vice versa).

Let’s examine the most recent available figures for industrial production, consumer spending, imports and inventories through the lens of how they are impacting truckload shipping.

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Personal Consumption Expenditures

• What is it?
  How much the American consumer is spending
• How it impacts truckload shipping:
  The more we buy, the more we need to produce (IP) and/or buy elsewhere (imports), which translates to greater demand for truckload shipping.

Throughout persistent inflation and fears over a possible recession, consumer spending has remained stable, helping to buoy the overall economy. Though the rate of growth has steadily slowed since Q4 2021, it is still growing — through Q2 2024, PCE is at 5.2% Y/Y, up slightly from 4.8% in Q1.

However, it’s worth noting the balance between physical goods consumption and services as it relates to trucking. When COVID struck, service-related industries closed and demand for physical goods soared to 15-year highs in an incredibly short period of time, driving a corresponding inflationary spot market.

Over the past several years post-COVID, consumers are spending more money on services (vacations, dining, entertainment, etc.), decreasing physical goods’ share. While overall Personal Consumption Expenditures on goods was up slightly in Q2 Y/Y (1.9%), the share of goods spending relative to total spending continues to decline.

Q2 goods spending ended at 32.3% of total — that ratio is down -0.4% from Q1 and -3.1% Y/Y. We’ll look for any increase in this to drive more freight demand in the coming months.

Industrial Production (IP)

• What is it?
  Total value of physical goods America is producing
• How it impacts truckload shipping:
  The more we make, the more freight that needs to move, from raw material inputs to finished goods

Though IP, like consumer spending, has trended downwards for several quarters, it is still stable. Through Q2 2024, the index sits at 0.4% Y/Y, up slightly from Q1.

While we don’t anticipate a large uptick in production (that would increase overall truckload volumes), as long as it remains stable, demand won’t likely get any worse either.

Imports (Goods Only)

• What is it?
  Total value of physical goods America is buying from other countries
• How it impacts truckload shipping:
  The more we buy from other countries, the more freight that needs to move, from raw material inputs to finished goods

Imports (of goods, excluding services) ended Q1 at 1.7% Y/Y, and climbed up again in Q2, closing the quarter at 5.3% Y/Y. The slight uptick in imports and IP are encouraging signs for increased freight later in the year.

Inventory-to-Sales

• What is it?
  The ratio of physical goods businesses have in stock vs. how much they’re selling
• How it impacts truckload shipping:
  When inventory levels are high, it creates a delay in demand for truckload shipping, as businesses will work off excess inventory before producing new goods (IP) or buying more goods (imports).

After pandemic-related supply chain disruptions wrought havoc to shippers’ inventories, many began to stockpile in an effort to combat volatility and meet demand.

Throughout 2023, many businesses tried to shed inventory amidst falling demand and rising interest costs.

After peaking at 1.40 in December 2022, the index has trended down slightly, staying between 1.36 and 1.39 for every month since then — through May (most recent available), the index is sitting at 1.37.

Now that the ratio has remained essentially flat for over a year, hovering around pre-pandemic levels, it suggests that destocking inventory levels have normalized, potentially leaving room for a restocking push later in the year.

Macroeconomic Takeaway
Not much has changed since Q1 — all the major indices are essentially flat.

Despite continued headwinds over the past year, the U.S. economy seems to have stubbornly avoided a recession.

Though we are still clawing out of a freight recession, the truckload cycle will continue its course.

The last time the cycle went inflationary (2020 – 2021), incremental freight demand drove rate growth. For this inflationary leg, the macroeconomic outlook still doesn’t support a massive spike in demand.

Instead, supply-side constraints (carrier attrition) will be the driving force.

Truckload Market Trends to Watch in Q3

We have climbed out of the trough of the truckload market cycle and are back in Y/Y inflation. Let’s unpack a few of the key trends impacting the market before we dive into the updated Q3 forecast.

1. The contract / spot rate divide begins to widen.

For the past couple years, shippers have used their transportation RFPs as opportunities to bring their contract rates (aka primary rates) back towards pre-pandemic levels.

And they were largely successful — we have seen the longest stretch of discounted spot rates (compared to contract) in history, lasting over two-and-a-half years.

In 2024, even though spot rates had already bounced off the bottom, many companies tried to get in one last round of reductions.

Those rates and routing guides set in the softer market of the first half of the year may not survive the second half, when the spot market will (likely) become more lucrative than the contract market.

We’ve already seen that in Y/Y terms, and have started to see it in absolute terms over the summer holiday shipping surges.

As the two diverge further, it will create tension across routing guides as carriers look to move more drivers into the spot market. We’ll see the shift from a shipper’s market back to a carrier’s market begin.

2. Private fleets are soaking up spot freight.

In an effort to combat the unprecedented volatility of 2020 and 2021, shippers made a move to create or expand their private fleets.

This added a lot of resilience in the form of guaranteed capacity and predictable rates, but with the overall downturn in freight volumes, there was a lot of slack in the line.

This excess private fleet capacity has soaked up a lot of freight that would have otherwise hit the for-hire spot market.

Until shipping volumes meaningfully pick up, shippers wind down their private fleets, or (most likely) the for-hire market continues to shrink, it will act as a bulwark against spot rate growth and prolong the softer market conditions.

3. Fuel prices are stable, but at a higher level.

Diesel has been on a ride over the past several years.

From 2015 to 2022, diesel, with a few exceptions, averaged between $2.50 and $3.50 / gallon.

In 2022, it ballooned up to $5.70, dropped to $3.80, shot up to $4.60, then dropped back down to right around $4.00, where it’s been for the past few months. 

Why does that matter?

Diesel fuel, which represents around 30% of a carrier’s overall cost, can have a huge impact on a trucking company’s profitability if it rises or falls faster than freight rates.

Many carriers were able to absorb historically high fuel costs in 2022 due to historically high rates. That hasn’t been the case for some time.

If fuel gets more expensive (e.g., if another geopolitical event to an oil-producing nation like we saw with the Russian invasion of Ukraine in 2022), we’ll see a faster rise to inflation as carriers can no longer absorb the increase.

If it remains stable, expect a slower rise.

4. Carriers are buying less trucks.

After remaining positive for six consecutive quarters (despite spot rates dropping for over a year), in Q4 2023, the bottom finally fell out for truck orders.

Q2 2024 was another continuation of the trend, as class 8 tractor orders (as tracked by ACT Research) were down -26% on a Y/Y basis.

This is another indicator showing the financial strain on the supply base — carriers have caught up to COVID-era backlogs, and the need for incremental capacity, or the ability to turn over old equipment, is lessening.

5. Carrier employment continues to wane.

Throughout most of 2023 and into 2024, driver employment figures remained curiously strong, despite weaker market conditions.

As freight volumes dropped, many drivers flocked to the security of larger fleets who were more exposed to lucrative contract freight.

As these drivers shifted from owner-operators (who don’t show up in payroll data) to W2 employees at fleets, it boosted employment data from the Bureau of Labor Statistics (BLS) even though the actual amount of capacity in the market was either flat or down.

Though numbers are stronger than we’d expect to see after this much time in a down market, we have finally started seeing more attrition over the past few months, and expect that continue as the full Q2 figures roll in.

All Employees, Truck Transportation (from the BLS, through July)

• Decreased sequentially for four consecutive months
• Decreased Y/Y for the past 14 consecutive months

Production & Non-Supervisory Employees, Long-Distance Trucking (aka Drivers, from the BLS, through June)         

• Decreased sequentially for three consecutive months
• Decreased Y/Y for the past 14 consecutive months

Operating Authorities (from the FMCSA)

• There was a net decrease of 750 operating authorities in June
• The population has declined in 20 of the past 21 months, leading to a total decrease of ~43,000 operating authorities over that time frame (for context, there were around 100,000 additions from 2020 to 2022)

Truckload Trends Takeaway

Not much has changed since Q2: Though freight volumes are sluggish, there are signs of carrier attrition in employment and authority revocations.

The speed and severity of the upward climb will depend on how fast carrier capacity exits the market, but after weak Q2 freight volumes, decreasing contract rates setting in, and relatively expensive fuel, it will likely speed up in Q3.

Q3 2024 Truckload Market Forecast

We’ve covered the macroeconomic environment, and key trends — but where does it leave us going forward?

Let’s look at the latest forecast.

Download all the forecast charts as slides for your next presentation using the form to your right.

We predict the Coyote Curve will continue it’s move into inflation, and drive towards a peak in 2025.

Though capacity and rates might feel stable, we are in a changing environment.

We continue to see carrier capacity leave the market (albeit somewhat slowly), truckload rates are clawing higher, and stable consumer spending supports a rosier freight demand outlook later in 2024.

With 2024 bid rates in effect (most of them lower) and spot rates trending higher, the divergence will drive volatility as cash-strapped carriers look to increase profitability after a very difficult 2023 and 2024-to-date.

All that said, while we are in an inflationary market, we don’t anticipate the sort of extreme conditions we experienced in the last inflationary market in 2020 and 2021.

For guidance, a look back to 2017 would be a better comparison.

Forecast Takeaway
We are in an inflationary spot market, heading to a market peak in 2025.

With contract rates remaining Y/Y deflationary, spot rates will overtake contract. This dynamic will create pressure for shippers later in the year.

While Q3 might not feel like a dramatically different operating environment, we are in a changing marketplace that is setting us up for a more meaningful flip later in the year.

What Can You Do?

Don’t be too aggressive in rate cutting.

Though tempting, be prudent about where you cut rates and trim capacity — we believe late 2024 will look different than the past several quarters.

Short-term gains today could cost you in the spot market tomorrow.

Keep core freight providers in the game. 

Even if you have limited volume and need for them now, if you think you’ll need them in a tight market, keep them engaged in your routing guide.

Now is the time to maximize planning and communication with the vendors you care about most.

Get your KPIs in order.

It’s easy to slack off when rates are low and service is high. Get ready for a tougher market by setting and communicating your KPIs with your carriers. Make sure you have a good carrier scorecarding system in place.

If you need to brush up on transportation benchmarks, check out our research study on logistics KPIs.

Watch the Forecast Webinar On Demand

This webinar aired during the most recent Supply Chain Master Series in late June.

You can watch freight market experts discuss trends and give an overview of the forecast.

Continued Learning: Truckload Market 101

These three helpful resources will help you learn about truckload market fundamentals and how we build our proprietary index.

If you’re new to the Coyote Curve, take a few minutes to familiarize yourself with this foundational content:

Part I: Supply & Demand 101: Basics of Truckload Market Economics
Part II: Understanding the U.S. Truckload Market
Part III: Explaining the Coyote Curve

*We use the Cass Truckload Linehaul index as a proxy for contract rate performance.