Pickett Research Predicts Rising Rates in TL Rate Cycle By Q4

Spot Linehaul Index Trends

Pickett Research, in its June 2023 issue, anticipates a transition from deflation to inflation in the truckload (TL) rate cycle. With the Q2 US Spot TL Linehaul Index settling at -18.8% Y/Y, as compared to a forecasted -20.0%, Q1 2023's -31.8% Y/Y is confirmed as the deflationary inflection point of the current cycle. The research firm predicts a shift towards year-over-year inflation by Q4 2023, leading into a strong inflationary phase in 2024.

Contract Linehaul Index Outlook

While the Spot Linehaul Index is rising, the Contract Linehaul Index continues to fall, currently at -13.4% Y/Y. The deflationary inflection point for this index is not expected for another one to two quarters. This period could be risky for buyers and sellers seeking long-term contract rate stability, as contract rates are anticipated to continue dropping in the coming months.

Implications and Outlook

As spot rates are projected to surpass contract rates by late 2023 and into Q1 2024, newly negotiated routing guides could face challenges, leading to a significant reshuffling. The scale of this reshuffling will likely be determined by the state of the economy at that time. Despite mixed macroeconomic indicators, the overall outlook for the US economy remains cautious. Nevertheless, Pickett Research expresses optimism in the report.

Source: Pickett Research LinkedIn