Understanding seasonal freight trends: what to expect and how to react
Running a trucking business
The last few years have been anything but ordinary for the trucking spot market. Average rates per mile (RPMs) have been unusually high. Competition for loads is increasing (40% of independent truckers we spoke to have been in the industry for two years or less). And, now that the market is returning to normal conditions, it has left a lot of small trucking companies scrambling to keep up. You may find yourself wondering, “Why are my RPMs so low?”, when in reality, the rates you’re seeing may actually be higher than the seasonal average for a typical freight market.
Keep reading to learn more about what to expect from the spot market each year and how to apply these learnings to run a successful trucking business.
Why is it important to understand seasonal freight trends?
The spot market is inherently seasonal. Just like the weather, there are typically highs and lows throughout the year. And, just like you wouldn’t expect warm weather in the middle of winter, you shouldn’t expect high RPMs all year long.
The spot market is inherently seasonal. Just like the weather, there are typically highs and lows throughout the year. And, just like you wouldn’t expect warm weather in the middle of winter, you shouldn’t expect high RPMs all year long.Share Tweet!
So, what does this mean for truckers navigating the spot market? It means you need to plan ahead and ensure you have enough trucks and drivers to handle increased demand. You also need to know when to expect a cyclical downturn so you have enough cash on hand to cover expenses.
An overview of seasonal freight trends
A quick note: Always remember that seasonality is a guideline and trends are never guaranteed. As we saw over the past few years, exceptions do occur.
The quiet season (January-March)
What to expect: Depending on what part of the country you’re in, the quiet season can start as early as December and last until April. This is typically the slowest time for freight, as volumes are down across the board. With the holidays in the rearview mirror and a new year just beginning, many businesses are winding down and placing fewer orders. The weather also plays a role in the quiet season, as low temperatures and snow-covered highways can make shipping difficult, if not impossible.
Due to low freight volumes, RPMs are usually low during the quiet season. Some trucking companies may choose to reduce their capacity during this time of year to offset their operating costs. If excess capacity remains, it will drive RPMs down even further as more trucks are available to haul the same amount of freight.
What to do: Despite lower RPMs, now is not the time to sit idle. When spot market rates are low, you’ll need to plan carefully to set your business up for success.
The produce season (April-July)
What to expect: The produce season usually kicks off in April and lasts until July, although it can start earlier or last longer depending on the region. Freight volumes begin to pick up during this time of year, as the weather warms up and in-season fruits and vegetables drive up demand for shipping. Produce shipments are time-sensitive so, with shippers working with tight deadlines to move their freight, it is often easier to find a good rate.
The demand to move produce is not the only reason that rates are higher this time of year. With produce shippers offering more money to take a load, non-produce shippers need to offer competitive RPMs in order to find a truck, especially in breadbasket regions.
What to do: RPMs may be increasing but it is still more important than ever to plan your trips carefully. A long-term strategy will help you maximize your annual take-home earnings and offset any losses from the previous season. Now is also a great time to ensure your fleet is in top shape to prepare for the busiest months ahead.
The peak season (August-October)
What to expect: The peak season is typically the busiest time of year for freight, as retailers begin to stock up for the holiday season. This is also when many schools are back in session, driving up demand for educational materials and supplies.
The peak season usually lasts from August until October, although it can start earlier or last longer depending on the region. Since freight volumes are up significantly, carriers have more loads to choose from and can be pickier, leading to higher RPMs.
What to do: This isn’t the time to be operating at reduced capacity. Carriers who maximize their profits during the peak season and upcoming holiday season will set themselves up for success during off-peak seasons.
The holiday season (November-December)
What to expect: It’s the most wonderful time of the year…for the spot market. As retailers begin to stock up for the holiday rush, freight volumes remain high. And, with many people traveling and visiting loved ones, fewer trucks on the road means increased demand for carriers.
During the holiday season, many shippers are also looking for last-minute expedited services to deliver their freight on time. This can lead to higher rates and a higher demand for spot market truckers, so make sure you’re prepared to haul.
What to do: Get ready for the holiday season by ensuring you have enough drivers to meet high demands. Companies that choose to operate during this time of year have more leverage in negotiating the rates they deserve.
Seasonal freight trends: the bottom line
The demand for drivers to move freight will always ebb and flow, so high RPMs are never a guarantee. However, thinking long-term and understanding spot market trends puts you and your drivers in the best possible position to take advantage of opportunities and survive any bumps in the road.
Want to learn more?
Set up a free consultation with our sales team today to discuss how we can help you plan ahead and increase your take-home earnings.