When we look back to the industry in previous years, it’s easy to say that a lot has changed.
I recall in 2019 when I was advising clients to push freight to the spot market as a strategy to help find savings with their transportation budgets. This goes without saying; times have changed. Currently, I am working with my clients to avoid utilizing TruckLoad spot market capacity as a means to mitigate increased costs in their transportation budgets. TruckLoad spot market capacity has always been volatile, and buyers of transportation (shippers/3pl’s) historically can absorb the one-off increases as needed. However, current spot market capacity needs have never been greater and have led to the “Death of the BackHaul.”
What is a BackHaul?
Back haul trucking is when a carrier books a shipment to reposition their equipment/drivers to the next desired location. Typically, these lanes would be non-traditional lanes for carriers that would leverage a 3rd party logistics providers sales and operational teams (like BM2 Freight) to fill the otherwise empty space on their equipment.
What is the relationship between a backhaul and the spot market?
In a balanced truckload marketplace, costs for services in the spot market could be similar or more competitive than the dedicated rates in traffic lanes as asset-based service providers utilized backhauls to recover costs on repositioning their equipment. The lower volume of shipments in a balanced spot market historically would keep TruckLoad pricing competitive. Compared to today’s unprecedented high volume of shipments in the spot market, which results in unprecedented high rates in the spot market.
Death of the Backhaul
High rates combined with high volumes in the spot market have been a winning combination for trucking companies. As a result, carriers are no longer looking to recoup costs but rather profit repositioning their equipment. Furthermore, we are seeing an upward trend in the small carrier demographic entering the market that is thriving primarily to serve spot market freight.
How do you avoid or minimize your need for spot freight capacity?
There is no silver bullet response, unfortunately. However, there are best practices that you can use today to navigate thru a tight truckload market. My team and I understand every shipper is unique and has unique needs. Therefore, we are here to help, listen, and collaborate on a solution to avoid utilizing spot freight capacity.
Reach out to me today to learn more about our truckload services.
CONTACT: John Graham, (773) 575-1586, firstname.lastname@example.org