Dive Brief:
- Werner Enterprises has reduced its exposure to the spot market and plans to continue curbing its exposure there, CEO Derek Leathers said Tuesday at Deutsche Bank's 2023 Transportation Conference.
- The carrier’s spot market usage, in the double digits, has continued to decrease slightly in recent weeks. The drop is down from a peak during the COVID-19 pandemic of approximately 15% for its one-way network, Leathers said.
- "We're never going to be the carrier that suddenly abandons our day job to go chase spot rates,” said Leathers, who also serves as chairman and president of the company. “We didn't do it during all of COVID.”
Dive Insight:
Staggeringly low spot rates, rising costs and retailers’ destocking have wreaked havoc on many carriers’ operations and finances. But the worst of the market downturn seems like it’s in the rearview mirror now, Leathers said.
Werner has navigated the highs and lows of the cycle by working with clients to meet their needs, such as by providing flexibility for changes to a fleet size rather than maximizing a contract. The result has been keeping customers with Werner, the CEO added, even if they could get cheaper rates elsewhere.
Carriers are still expressing caution, with Marten Transport Executive Chairman Randy Marten noting in a Q2 earnings report challenges with soft demand, excess capacity and inflation.
Echoing a similar caution about the spot market, Knight-Swift Transportation Holdings CFO and Swift Transportation President Adam Miller said last month the carrier is focused on reducing its outsized spot exposure to better improve revenue per truck and margins.
Muted demand in recent quarters has put pressure on contract pricing, TL carriers said, but those declines may slow, Knight-Swift CEO and President Dave Jackson said on an earnings call.
“After bottoming in the second quarter, spot rates may bounce along the bottom or show modest improvement in the third quarter before showing expected modest seasonal uplift in the fourth quarter of this year,” Jackson said.
