Will trucking rates in 2023 increase or decrease?
Without a doubt, trucking rates in 2023 have been lower. In the short term we see truckload rates decreasing. Clearly, the downtrend that began in the 3rd quarter of 2022 is still in play. However, with that said lower freight shipping cost may not last. There is economic data that does not seem to support a continuing downtrend. Evenso, 2023 will be full of volatility.
Shippers still have the advantage for now
The freight industry like any other goes through cycles. Up to a point, freight shippers still have the control. Proof of this are the lower contract rates we see. Additionally, the truckload spot rates have taken a beating lately. This unfortunately for truckers is not welcome news. However, all trends bottom out and turn around.
How do you know if trucking rates in 2023 will increase?
The truth of the matter is that no one knows what the future holds. Even if, data shows shipping freight rates are expected to rise. LTL rates have increased on the average of 5% already whereas, truckload rates have not. Admittedly, LTL rates historically adjust yearly, therefore if LTL shipping rates in 2023 increase any further remains to be seen.
Pent up demand for commodities including class 8 trucks
Class 8 truck orders increased in the 3rd quarter of 2022. At this time 42,500 units wait for finally assembly. To clarify, this is nearly a 50% increase YOY. Clearly, fleets expect freight demand to increase post Covid. Trucking companies do not want to miss out on new potential freight contract opportunities. Therefore, they placed their orders in anticipation of the increased demand for cross country shipping services.
Further regulations will make trucking services more expensive.
Additional regulations are nice in theory and may even be necessary, however no change is easy or cheap. Therefore, investments in new technology have to be paid for somehow. For trucking company owners this will come in the form of higher freight hauling rates. In fact, California, which undoubtedly has incredible amounts of freight is requesting zero-emission trucks. This undoubtedly affects cost of living for everyone in California.