The spot market in the transportation industry is extremely volatile as most players who participate in it are aware. The driving factor for this instability is the volume of freight shipping at any given time.
Supply and Demand Within the Spot Market Freight
Freight volume directly affects the supply and demand of the spot market as a whole. When freight volume is up and customers need to get their product shipped, there is often times less competition between carriers because of lower capacities in their fleets forcing higher rates to be paid to those who can provide the trucks. On the opposite side of the spectrum, when freight volume is low, there is more competition for that freight which drives the spot market rates back down. Historically rates paid in the spot market have been higher than contracted shipping rates.
YTD Spot Market Rates
The beginning of the 2011 calendar year started off with lower volumes of spot market freight available. This brought in more competition and lower overall truckload rates. Spot market rates then rose from March through June with the summer rush of product being shipped largely affected by the food and beverage industry. Spot market rates and overall volume of shipments peaked in mid May through mid June. Since that period of time spot market rates have dropped industry wide with the decline in truckload shipments across the board.
Forecasts show that we can expect to see this trend continue throughout most of the year with a possible peak in November due to the holiday season push which is fast approaching.
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