Freight Markets

The poor freight environment and declining rates seen in the past couple years is taking a toll on small carriers like owner-operators, according to a report issued in June by transportation investment firm Stifel.
Here’s the link to the Stifel report:
Stifel was unable to confirm the number of carriers who’ve gone under, its report says small carriers have had a much harder time absorbing the poor freight volume and sinking rates than their larger counterparts, given smaller carriers “higher unit cost structure,” Stifel says.
More so, Stifel states, the trend will likely continue, especially as federal regulations drive up carrier costs and continues to restrict small carriers’ productivity. “[Small carriers] struggle to make money in this challenging spot market even though a good number of these carriers are not compliant (i.e., they cheat) on hours of service and speed,” the report says. “Many of these carriers may fall out of the industry faster than they otherwise would have had the cavalcade of federal regulations been their only headwind.”
Stifel mentions in the report that all carriers are being negatively affected by the current freight and rate environment, and larger carriers are cutting their fleet size in an effort to cut costs and protect equipment exertion.
Shippers are “pounding on rates,” the report says, referring to the present pricing situation as “rate carnage.”
Though coming federal regulations ”” like next December’s ELD mandate ”” will likely be a pain point for smaller carriers, such regulations could cause rates to spike, offering small carriers at least partial reprieve from poor rates and costly compliance with new regulations.