carrier-selectivity
The Efficiency Paradox
The Accepted SONAR Truckload Volume Index (ASTVI) recorded a three percent decrease in the week ending October, settling at 9,574 accepted loads compared to the annual average of 9,872. This quantitative data does not reflect a simple seasonal decline in demand, but signals an active and selective contraction of supply by carriers. While the market appears saturated with requests, the actual transportation capacity is decreasing because carriers are rejecting low-margin routes.
The immediate consequence is a reversal of the commercial power dynamic: B2B buyers, who are not covered by contracts guaranteed by tenders, are forced to turn to the spot market to move goods. This forced migration exposes companies to unforeseen cost volatility, eroding the predictability of the Cost of Goods Sold (COGS) and straining cash flows.
The Dynamics of Selectivity
The National Truckload Index (NTI), which monitors spot rates for dry vans, has reached $3.53 per mile, exceeding the low recorded at the end of August by ten percent and showing an increase of fifty percent compared to the same period last year. The growth in spot prices is not driven by a boom in demand, but by a shortage of residual capacity available in non-contract markets.
The underlying logic implies that carriers are filtering loads, accepting only routes with high yields and rejecting those with low volume. This behavior creates an artificial distortion: the capacity exists physically, but it is economically inaccessible to those who cannot pay the spot rate premium. The result is a collapse of overall logistics efficiency, where transportation costs become uncontrollable variables instead of predictable fixed costs.
The Risk on Working Capital
For financial executives and supply chain operators, this dynamic represents a direct risk to liquidity. The increase in cost per mile translates into an immediate increase in logistics costs, which negatively impacts the gross margin if it is not possible to pass the cost on to the end customer.
The lack of contractual coverage forces companies to manage price risk in real time, exposing them to daily fluctuations. In a stable scenario, contracts cover the basic capacity; when freight rates decline, every unit of goods that is not moved becomes a lost opportunity cost or an additional operating cost to be borne to guarantee the service. The volatility of spot freight rates therefore acts as a hidden tax on operational resilience.
The Market Trajectory
The euphoria assumed that cargo capacity would remain abundant; however, data shows a selective contraction of supply. The divergence between the decrease in traded volumes and the increase in spot rates indicates a market undergoing a violent correction, where scarcity of capacity is the dominant driver.
Each week of delay in reconfiguring the logistics procurement strategy equates to a direct loss of gross margin equal to the difference between the contract rate and the spot rate. The market is not simply rising; it is shrinking, penalizing those who did not secure their capacity in advance.
Photo by Artem Balashevsky on Unsplash
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