It’s not if the market will shift; it’s when

Like death & taxes, volatility in the freight market is certain.  Whether you are a Broker, 3PL, a shipper, or a carrier, the question isn't if the market will shift—it's when. Currently, we're experiencing the fifth and longest market cycle in the past 20 years, with cycles typically occurring every 2-4 years. Regardless of when the market shifts, the effects are inevitable: one party will be stuck in an unfavorable contract, or forced to take a risk on the volatility and inconsistency of the spot market.

The current market shift has favored shippers, pushing many carriers to rock-bottom rates and increased flexibility to win business, a stark contrast with 2020.

Data from Greenscreens.ai shows that contract and spot market rates are holding somewhat flat, often an early indication of a potential strengthening freight market. Our data also indicates that minor seasonality trends have returned indicating a level of normalcy not seen in recent years.

With current macroeconomic and geopolitical factors heating up, there is reasonable hesitation amongst industry experts as to when exactly the market will shift. However, one thing is certain — the market will inevitably shift once again.

Greenscreens Spot Rate Trend Updates for July 2024 show:

• Minor inflation in the South
• Continued softening in the North
• Northern markets remain down around 5.5% to 6.1% for Van when compared to 2024H1 rate levels.

So, how should you prepare for when the market shifts?

For shippers, it's essential to dive into data to analyze costs and pinpoint areas of weakness. Determine where you are overspending and find ways to eliminate or optimize spend. Shippers, whether primarily operating in the spot market or on contracted rates, should have a backup plan that provides flexibility, as the increased risk for service failures will heighten as the market tightens and carriers seek higher-paying freight. Focus on growing and maintaining relationships with carriers and service providers that prioritize reliable service at a more predictable cost. Find trusted partners, expand your network of vetted capacity partners, and be ready to diversify your carrier needs as demand increases. Lastly, prepare your team. Familiarize them with each phase and the actions that need to be taken.

For brokers, your carriers will certainly want to exert pricing power once the market shifts — particularly on committed contract rates. While it may be tempting after two years of extremely low rates, carriers should exercise caution and avoid quick decisions as demand and rates start to rebound. Absorbing rate increases from the shippers' perspective will take time and brokers will need a bridge to manage the change. Building trust at this level is a crucial foundation for when the next market downturn inevitably occurs.

As a broker it is also crucial to focus on aligning your bid strategy to specific and unique strengths in your network of carriers. In recent years, many brokerages have continued to invest in technology while making cuts elsewhere to stay afloat. Investing in new technology approaches created a competitive advantage during the downturn and will set teams up for future success when the market shifts this time around. Cutting-edge technology allows brokers to eliminate tedious manual processes and make more dynamic pricing decisions based on current market conditions. Leveraging detailed and consolidated data helps brokers and 3PLs identify market tightness and new opportunities, enabling them to adjust strategies in real-time to maximize and protect margins.

Prepare to thrive in any market

In a dynamic environment influenced by seasonality, unpredictable weather, and economic conditions, having access to real-time market data and business insights is critical to success. The right technology ecosystem, powered by enhanced data provides a strategic advantage in making dynamic plans. Educate your team on the plan, have the levers ready to pull, and prepare to navigate the next market cycle. If you are set up for success, you can thrive in any market.

So, we'll ask again: When the market shift occurs, are you ready? Or will you continue with the same old approach, expecting a different outcome?