Freight Market Hits 2019 Levels Amid Economic Pressures
As we roll into the heart of summer freight markets are feeling the heat in more ways than one. Welcome to this week’s Redwood Rundown, where we break down the latest trends shaping transportation and logistics.
Tender Volumes Hit a New Low
We’re officially in the dog days of summer, and freight activity is reflecting it. Tender volumes have dropped to their lowest point of the year—even lower than Q1—and are now tracking with 2019 levels. That’s a significant regression, especially considering the growth expectations set earlier this year.
What’s Driving the Decline?
Several macroeconomic factors are converging to suppress demand:
- Tariffs and business uncertainty are creating hesitation across industries.
- Manufacturing output continues to decline.
- The housing market remains stagnant, offering little support to freight volumes.
While there are pockets of activity—notably in the Mid-Atlantic, with Baltimore and New Jersey showing slight upward trends—tender rejections remain below 4%, signaling that capacity is still widely available.
Carrier Conversations: “When Will It End?”
That’s the question we’re hearing most from carriers. Unfortunately, the answer isn’t encouraging. Earlier optimism hinged on a manufacturing rebound, but that momentum hasn’t materialized. The market remains soft, and there’s no clear sign of a turnaround.
Market Indicator to Watch: DAT Contract-Spot Spread
The DAT contract-spot spread remains our most reliable market indicator. Here’s where things stand:
- Contract rates have held steady for nearly two years, averaging around $2.02/mile.
- Spot rates are hovering near $1.61/mile, with minor fluctuations between $1.55 and $1.74.
Even with capacity exiting the market, demand is falling faster than supply, reversing the early-year trend when front-loading (due to tariffs) temporarily boosted volumes.
Looking Ahead
With few demand triggers on the horizon, the freight market is likely to remain sluggish in the near term. For shippers and carriers alike, the focus should be on efficiency, cost control, and strategic planning to weather the current cycle.
In the meantime, enjoy the summer and stay cool. We’ll be back next week with more insights from the road.
