WARNING: Don’t Expect This Freight Cycle to End Soon

Zach Strickland, a FreightWaves expert, warns against expecting a quick end to the current freight market cycle. In a recent SONAR update, he analyzed over two decades of freight data, identifying at least six disruptions since 2016 that have led to today's complex and volatile environment. Strickland's analysis is based on the Cass Freight Shipments Index and the Cass Truckload Linehaul Index, which track base truckload costs excluding fuel.

He traced the origins of the current market structure back to the 2004-2008 era, when diesel price volatility accelerated the rise of the fuel surcharge, hurricanes disrupted supply chains, and the brokerage industry began to take shape. Prior to that, there was a steep freight recession from 2008-2009, followed by a period of relative calm from 2010-2016 known as the "great stability."

Strickland emphasizes that most cycles last much longer than market participants expect, and the current cycle is only in its early stages. He notes that the Outbound Tender Rejection Rate has dropped to 12.73% at the end of October, but advises against interpreting this decline as a sign of stabilization, as tender volumes continue to rise and the Thanksgiving surge has not yet been reflected in the data.

Geographically, rate volatility is most pronounced in the West, with van rates active in the Mountain Prairie region, refrigerated rates showing falling rates along the West Coast, and dark-blue rejections centered on Ontario and Southern California. Strickland specifically warns shippers to monitor the Los Angeles market due to an ongoing port strike.

The takeaway from Strickland's historical review is that rapid freight booms often result in equally sharp busts, and the economic benchmark for stabilizing growth is 2% to 3% GDP growth. The broader implication for carriers, brokers, and shippers is that extended, volatile cycles may be the more reliable baseline for planning.