Shippers still held the stronger position in the 2024 freight market, using plentiful capacity to reduce freight spend in much the same way they had shifted committed carrier freight to brokers after the 2018 rate cycle.
The original “Where's My Freight?” article was published in 2019 after the rate party of late 2017 through 2018 ended. Attempts to update it for the prolonged freight recession led to the conclusion that the original argument remained relevant enough to recirculate.
Where's My Freight: The 2019 Article
The anticipated capacity crisis and rate surge ended quickly in early 2019. Carriers moved from the strongest market since deregulation to a severe hangover.
KSMTA observed that freight reciprocally “committed” by a shipper and carrier was moving, in whole or in part, to the spot market. Client network data and conversations with carriers showed the same pattern.
What Was Happening?
A national shipper approached a mid-market truckload carrier in January because it was concerned about capacity. It asked the carrier to commit to a specific weekly volume on a defined lane.
The carrier positioned spot trailers, increased a destination capacity commitment, mapped EDI, created service-tracking metrics, and trained employees. The business worked well until the carrier received no tenders by Thursday of one week.
The shipper explained that large brokers with lower rates were receiving and accepting the tenders first, then asked whether the carrier could reduce its rate.
The relationship had moved from commitment and partnership to a transaction. It was a commitment when the shipper feared a capacity shortage; it became transactional when supply and demand made the spot market cheaper.
The example was not isolated. From October 2018 to April 2019, loads hauled by KSMTA clients for one publicly traded broker increased 43%, while the quality of those loads declined sharply.
Why Was It Happening?
Transportation is a cost for most shippers, and their objective is to minimize that cost while meeting operating, risk, and compliance requirements. Brokers are not at fault for supplying capacity to shippers and freight to carriers. The freight belongs to the shipper, and the fragmented truckload market gives shippers purchasing leverage in most cycles.
When trucks are scarce, shippers emphasize partnership, driver issues, reasonable scheduling, and consistency. When capacity is abundant, the conversation shifts to price, service problems, and production issues.
The cycle was especially painful because reputable carriers had increased driver pay and invested in equipment. Carriers also contributed to the imbalance by purchasing trucks in record numbers during 2018.
Profitable, compliant truckload operations require more than hard work. Essential attributes include:
- A strong customer experience.
- A culture that trains and supports drivers and non-drivers.
- Freight technology for driver communication, asset and compliance management, actionable metrics, and timely financial reporting.
- Access to capital expenditures and working capital.
- The ability to bear several forms of risk.
- Sales and marketing capability to identify, sell, quantify, and analyze opportunities.
- Consistent attention to detail.
Reputable shippers underwrite preferred carriers for safety, compliance, insurance, capacity, financial stability, drop-trailer capability, driver quality and turnover, and service.
When freight moves through brokers, that underwriting is often reduced to authority, insurance, and safety verification. Large carriers use brokers to fill network gaps; small carriers may depend on brokers because they lack sales teams and access to major shippers.
The result is that shippers indirectly support carriers they would not directly select, perpetuating the excess capacity that has suppressed rates since deregulation.
Thoughts and Suggestions
No simple answer eliminates the cycle, but the article recommended:
- Carriers should monitor and manage shipper compliance with freight commitments.
- Carriers should develop a Shipper of Choice rating and include it when assessing freight desirability.
- Carriers should use detailed network analysis to know which freight is and is not profitable.
- Shippers should develop a Carrier of Choice rating and continue using it when capacity is loose and spot prices are attractive.
Long-term industry success depends on fair rates, driver-friendly freight, and binding agreements that specify lanes and volumes. Without lower barriers to entry, market economics will continue to favor shippers and make consistent carrier profitability difficult.