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Rising Diesel Prices Impact Trucking Capacity & Rates
Rising diesel prices increase trucking rates, masking effects on capacity and freight market trends.
Data from FreightWaves show how diesel prices are affecting trucking capacity and rates. Diesel prices for Class 8 trucks have soared by 16% since July, the steepest hike in nearly a year. This sudden spike in fuel costs is shaking up the trucking market.
What the Data Shows
- Rates Get a Boost: Surprisingly, these rising fuel prices have propped up spot rates for dry van loads in September, giving the trucking industry a short-term boost.
- Underlying Trend: However, when we exclude fuel costs from the equation, spot rates are on a downward trajectory, which is unusual for this time of year.
- Impact: This drop in rates might lead to more trucking capacity leaving the market sooner than expected, tightening the transportation environment.
Demand & Capacity
Shipper requests for truckload capacity have surged by approximately 15% since April, signaling increasing demand for freight transportation.
Despite the growing demand, carrier availability hasn't significantly increased. National rejection rates remain below 4%, far from levels that would significantly affect rates.
Costs Vs. Rates
With surging fuel costs, carriers struggle to transfer these additional expenses to shippers, particularly in a market with ample capacity. This dynamic is aggravated as retail fuel prices don’t adjust as swiftly as wholesale prices, adding more strain on contract freight. This financial pressure is exacerbating carrier exits, a trend anticipated to heighten this winter.
The increasing rate of carrier exits may soon narrow the market, impacting both rates and availability – shippers should prepare for a constricted market in 2024.