By Eric Masotti, President of Logistics, Trailer Bridge, Inc.
I think I can speak for everyone in the transportation industry when I say that 2024 couldn’t get here fast enough. Since the new year has indeed arrived, it’s time for me to reflect on my predictions for 2023 and prognosticate what is to come in 2024.
With countless bankruptcies, excessive fraud, and tens of thousands of layoffs, 2023 brought with it one of the worst freight markets I have seen in more than 20 years. I may need to recalibrate my crystal ball because I didn’t foresee a freight recession of this magnitude when making my previous predictions.
The trucking industry alone suffered several blows. Perhaps most notable are the bankruptcies of the LTL giant Yellow Corp. and billion-dollar backed brokerage company Convoy. But the market didn’t discriminate. Ocean carriers, railroads, air carriers, and freight forwarders were all hit hard across the board.
Despite all the bad news, we were still able to sneak in some wins. Trailer Bridge broke its monthly load volume record 6 times in 2023. But like everyone else, we were not immune to the industry struggles and are eager for brighter days ahead.
Trans-Pacific Container Pricing
2023: Container Pricing Continued to Fall
At the end of 2022, container pricing was hovering just below $5k. At the time, I was uncertain if pricing would drop much further, as carriers had begun cutting back on voyages to reduce capacity. However, we saw this number reduce by more than half, with containers running less than $2k for most of 2023. This is a dramatic change from just 2 years ago in 2021 when a 40 ft. container could run as high as $20k.
2024: Container Pricing to Rise Again
As we enter the new year, there are multiple factors creating disruption in the global shipping space. The Panama Canal has been experiencing an increase in volume since the pandemic but is now forced to limit traffic due to drought. Additionally, security risks in the Red Sea have caused many ocean carriers to be diverted and seek alternate routes.
In 2023, TEU rates hovered around $2k for most of the year. But this is unlikely in 2024 considering the current disruptions. This year, I think the rates will average more in the $3k-$4k range. But with current spot rates around $10k, it is hard to predict how it will play out.
2023: TEU Peak Capacity Prediction was Spot-On
I actually got this guess correct (which feels like it never happens). For 2023, I predicted the TEU capacity would peak at 2.3 million TEUs, down from 2.6 million TEUs in 2022. We saw the peak demand occur in October of 2023, which clocked in at 2.3 million TEUs!
Overall TEU capacity also decreased. While I predicted that it would drop slightly, we experienced a much more significant shift. There were about 500k less TEUs most months this year than in 2022.
2024: TEU Peak Capacity to Increase
For next year, we will predict that peak demand will trend closer to 2022’s number at 2.5 million TEUs.
DAT Monthly Dry Van Spot Rates
2023: Dry Van Spot Rates Lower than Expected
In 2022, we predicted that DAT van rates would drop, with a peak of $2.62. I was right in that the rates would go down, but they decreased much faster than I expected. After the year we’ve had, a peak of $2.62 would have been a dream. But the average rate in 2023 hovered around $2.10, with a peak of $2.41.
2024: Dry Van Spot Rates to Go Up in the New Year
Now for some good news (or maybe wishful thinking). There are signs of DAT van rates trending back upward in 2024, but I don’t think we will see the increase until Q2. Based on current rate averages across the United States, I will predict a peak of $2.39 per mile in 2024.
Class 8 Truck Orders
2023: Peak Truck Orders Just Shy of Prediction
For 2023, we predicted a peak order volume of 38k for class 8 trucks. While numbers were hovering around 20k for the first 8 months of the year, the peak volume reached 37k in November. Man, that was really close, but I still would have lost in The Price Is Right.
2024: Peak Truck Orders to Rise Slightly
There is reasonable belief that the market will improve for carriers in 2024, but some of this will come from replacement of older vehicles. So, I will be conservative in my forecast and say that the peak order volume will reach 45k.
2023: Peak Fuel Price Soared Past Prediction
The last weekly average for diesel from the Department of Energy was $3.99, which isn’t far off from my peak prediction of $3.91. However, fuel peaked in September at $4.63 so it’s fair to say I missed the mark.
2024: Fuel Prices to Increase
With better conditions on the horizon, let’s say that diesel will peak at $4.75 in 2024. As the freight market improves in the second half of the year, I think fuel will respond with higher prices.
2023: Superbowl Prediction a Miss
My 2023 prediction that the 49ers would win the Super Bowl was crushed, as they lost to the Eagles in the NFC Conference Championship. Ultimately, the Chiefs brought home the title after beating the Eagles in Superbowl LVII. This was a real bummer, as it broke my 2-year winning streak for sports predictions.
2024: Betting on the Same Team
For 2024, I am going to run my same pick back and say the 49ers will come out on top. I was just a year early. Brock Purdy has gone from “Mr. Irrelevant” to an MVP candidate in less than 2 years and the team is in a good spot. So, if they stay healthy, they will win all playoff games by 10 points or more.
In the summer of 2023, there were a lot of people expecting the entire economy to be in recession by the end of the year. Fortunately, that didn’t happen.
As we step into 2023, there are some positive trends for the overall market in 2024. The Federal Reserve is signaling multiple interest rate drops which could really boost the market, as home and auto purchases have dwindled recently.
Overall, I’m starting to feel optimistic and believe this will be the best prediction year yet. And at this time next year, I expect those in our industry will be celebrating a record year – including Trailer Bridge!