Are Carriers Being Too Hopeful About Freight Recovery?

Few in freight appeared to have high hopes for profits in the first quarter, but the landscape was at least starting to look a little brighter for carriers, according to the Q1 Freight Sentiment Indexes.

The only category that declined besides near-term profitability was longer-term workforce — which nonetheless held solidly positive and was down only slightly from the prior quarter. Truckload spot rates, as measured by the FreightWaves National Truckload Index less fuel, had hit a low of $1.67 in mid-November.

That does not discount that, when including a long-term perspective, carriers saw themselves in a marginally stronger position than three months earlier. In the business investment subcategory, shippers scored highest — meaning they were the most likely to consider it a good time to spend on new technology.

The lesson for owner-operators and small fleets

• Sentiment and spot rates move faster than contracts — build working capital buffers before the slow quarters, not during them
• Factoring smooths the gap: it turns receivables into cash without adding debt, so a soft quarter does not become a missed payment
• Use soft markets to renegotiate insurance, fuel and equipment costs while carriers are competing for your business
• Invest in technology when margins allow, because the savings compound through the next cycle

The carriers that survive cycles are rarely the ones with the best rate. They are the ones with the most predictable cash flow.