The Logistics of Logistics REPOST: Understanding the Rise and Fall of Truckload Rates with Chris Pickett
Joe Lynch and Chris Pickett discuss the rise and fall of truckload rates. In the podcast interview, Chris explains the predictable patterns and causes behind the rise and fall of truckload rates.
About Chris Pickett BioChris Pickett is the Lead Market Analyst and Founder of Pickett Research, LLC – an independent market research firm focused exclusively on the dynamics that drive US truckload freight rates. From 2006 to 2020, Chris played key leadership roles (including Chief Strategy Officer from 2010-2020) at Coyote Logistics (a UPS Company), a leading provider of non-asset based 3PL solutions across North America and Europe. Over various periods along the way, he held operational responsibility for all activities related to North American Sales, Marketing, Operations, Supply Chain Engineering, and Pricing Strategy. Chris' passion for understanding US Truckload Freight Market dynamics and predicting the direction of spot and contract rates stems from his work at Coyote over this period where long-term contract commitments were often made based on an expected long-term cost of capacity in the spot market. It has since become a borderline obsession, where his fascination in these market phenomena continues to drive the evolution of the market cycle framework and the predictive value it delivers. Before joining Coyote in 2006, Chris spent his early career in supply chain software development, network design, and consulting. He earned a B.S. in Industrial & Systems Engineering from Virginia Tech, an M.Eng. in Logistics from MIT, and an MBA from Georgia Tech.
About Pickett ResearchPickett Research (PR) was established in 2020 to fill a void in the US Truckload Freight Marketplace for analysis, forecasting, and market guidance that is both objective and credible. The mission at Pickett Research is to fill that void by leveraging a unique market philosophy, framework, and forecasting methodology that was developed and refined over more than a decade of commercial market experience scaling one of the largest and fastest-growing truckload freight brokers and 3PLs in North America from scratch. PR's flagship research product, The Pickett Line, launched January 2021 as a monthly publication available via paid annual subscription, provides an overview of current and expected future market conditions and a rolling forecast for national spot and contract truckload linehaul rates on a quarterly year-over-year basis for up to five years out. To learn more or to subscribe to the 2021-22 series, visit www.pickettresearch.com or connect via email at chris@pickettresearch.com.
Key Takeaways: Understanding the Rise and Fall of Truckload Rates- Chris's website shares his philosophy about the rise and fall of truckload rates. The next 3 bullet points are cut and pasted from the Picket Research website
- While it remains exceedingly difficult to predict the behavior of any individual buyer or seller in the US Truckload Freight Market, the behavior of the herd has proven to be quite consistent over the past 15 years – through recessions, energy crises, natural disasters, and even a global pandemic.
- When demand exceeds supply, rates move higher. As rates move higher, net Class 8 tractor orders spike, and incremental capacity enters. And in a market governed by human beings making financial decisions, we always overshoot. We always overdo it.
- Too much capacity enters relative to demand, rates hit a peak then collapse – along with Class 8 tractor orders – towards a deflationary trough. From there, the cycle reverses, unprofitable capacity exits, everyone forgets about the last cycle, and history repeats itself. And as long as the market remains structured in the same way, with fragmented supply making decisions in silos based on individual best interests, the cycle is doomed to repeat itself in perpetuity. While each cycle unfolds a little bit differently than the last as influenced by the nuances of the times, the pattern remains the same.
- Learn more about the rise and fall of truckload rates here: The Pickett Line