Dive Brief:

• The average per mile truckload linehaul rate that C.H. Robinson charged to its customers increased nearly 33% YoY in Q1, CEO Bob Biesterfeld said on the company's earnings call last week.
• The uptick in rates came on as truckload volume declined 6.5% in the quarter, and LTL volumes grew 15%, according to the company's financial release. And Biesterfeld noted that a macro environment with tight capacity is pushing up rates due to a lack of drivers and winter weather in the quarter.
• "It's our belief that — given the current structural constraints around expansion of truckload supply, coupled with additional government stimulus, a back-half reopening of the economy and potential infrastructure spending — the market conditions that were existing today have the potential to remain out of balance for the next several quarters," Biesterfeld said.

Dive Insight:

The trucking market — along with generally every other freight mode — has been dealing with demand surpassing its supply of equipment and resources for months, as consumer spending drives the need to restock inventories.

C.H. Robinson's quarter ended March 31, but this trend continued through April.

Spot load posts were up more than 577% YoY in April, while truck postings were down 17% YoY. The imbalance sent rates across truck modes up more than 50% YoY, according to the latest figures from DAT.

With rates surging in the spot market, C.H. Robinson saw this business "increased significantly," while its contractual business "declined as we continued to pursue profitable volume growth by reshaping our portfolio through repricing the book of business with new and existing customers," Biesterfeld said.

He said the company has been working since Q4 of last year to reprice its contractual business, an effort he said is going to continue into Q2. As it reprices its contracts, the company is betting that the tight market dynamics will continue, giving it pricing power over the shipper.

"Based on our forecast run rate right now, by the end of the second quarter, we'll have about 75% to 80% of our contractual book repriced in either the fourth, first or second quarter," Biesterfeld said. "So, for all practical purposes, we'll call that current truckload market pricing."

Contractual rates tend to lag spot rates, and Biesterfeld confirmed that the "spot market does continue to pull the contractual market up."

This is an environment that is lifting other brokers as well, as noted by XPO Logistics on its earnings call this week. XPO saw its brokerage revenue rise 83% YoY on a 25% YoY bump in loads per day.

"In brokerage, capacity is still tight, and the volume backdrop remains fantastic," XPO Chief Strategy Officer Matthew Fassler said on the call.