Analyzing the 2024 Peak in Spot Prices and Forecast Future Trends
Week - 6 - road transport spot rates enter soft cycle
Today, we`ll examine current spot market sentiment, review the past year, and outline expectations for the upcoming soft cycle following the year end peak.
Let's begin with recent market trends. The following chart highlights spot price levels versus contracted price levels across all monitored markets. The weeks leading up to Christmas in 2024 matched our forecasts with the week of December 16th marking an all-time high in the spot-to-contract price ratio.
Hover and/or click the chart for more details and figures
Each data point shows the difference between spot prices and contracted prices for a specific week (Index 100). For instance, in week 51 of 2024, spot prices peaked at 22.7% above contracted price levels.
2024 proved especially challenging. After Easter, capacity constraints pushed spot prices above 2023 levels and kept them there. This stemmed mainly from contracted shipments being forced into the spot market due to high carrier rejections.
We´re seeing a self-reinforcing cycle in the market currently. While shippers try to avoid the spot market by shifting volume to contracts, the contracted segment`s prices don't reflect current production costs due to limited capacity and cost increases. This forces many shipments onto the spot market as urgencies, driving prices even higher.
In a previous post, I discussed potential factors that could mitigate this effect. Recent economic outlook adjustments and lower transportation demand might help. However, adding fleet capacity, another mitigation effect, remains unlikely in the current environment.
The next chart includes an updated forecast, predicting significant spot price decreases. Still, I expect prices to stay moderately above or around contracted levels during these softer weeks.
Hover and/or click the chart for more details and figures
Should prices stay below contracted rate levels for several weeks, we might witness a broader shift in market sentiment again. It is too early to draw conclusions or anticipate such changes now, but we`ll monitor this development closely.
Our paid subscribers can expect Thursday´s article to cover spot buying strategies, with a focus on optimal market timing. Stay tuned.
Christian Dolderer
Lead Research Analyst
Transporeon