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Q3 2022 Coyote Curve Truckload Market Forecast

Corey Klujsza headshot for Q3 2022 Coyote Curve, are truckload rates actually going down?

In our last quarterly update, the situation looked pretty grim for shippers.

Supply chain volatility was rampant, and our Coyote Curve® index — a couple quarters from an all-time peak — looked like it could be reversing course and heading back up.

Yet we predicted it was a minor blip, and spot rates would continue their downward trend. In Q2, inflation and surging fuel prices became the new trending topics. 

So surely that means truckload rates also went up and the forecast was off, right? Not quite. 

How is that even possible? We'll tell you everything you need to know in the Q3 Truckload Market Guide.


Q3 Truckload Market: The Complete Guide for Logistics Pros

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Check out these essential resources to build a foundation on the truckload market and our proprietary Coyote Curve index. 


Q2 2022 Spot & Contract Rate Recap

Despite rampant inflation in the wider economy, a still-tight labor market, ongoing supply chain issues, summer shipping, and of course, record-high prices at the pump, we still saw an easier capacity and rate environment in the truckload market (more on that below).

Spot rates started coming down, and carrier capacity was easier to come by, as is typical for this phase of the truckload market cycle. In fact, it was one of the fastest moves downward we've seen in history.

Let’s take a closer look at how Q2 ended up. 

Q2 2022 truckload spot and contract rates Coyote Curve

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Q2 Truckload Spot Rates Went Deflationary
  • TL spot rates at the end of Q2: -22.6%
  • Down from 12.4% in Q1 — a steep decline — and finally crossing equilibrium into Y/Y deflation

Q2 Truckload Contract Continued Downward Trend
(But Still Inflationary)
  • TL contract rates* at the end of Q2: 10.5% 
  • Down slightly from 13.2% in Q1, which is in line with past cycle behavior (typically lags spot rate index by one or two quarters)

Q2 Takeaway
Despite surging diesel prices and inflation in the wider economy, both spot rates and capacity softened significantly, driven by our place in the truckload market cycle (more on that below). 


Current State: How Are Truckload Rates Actually Going Down? 

even though there is inflation and rising diesel, it is possible to have truckload spot rate deflation

The Consumer Price Index (CPI) is up 9.1% Y/Y in June — the highest it's been in 40 years. The average national price for a gallon of diesel hit $5.72, a record high, and up 150% Y/Y. 

How is it possible that truckload spot rates a deflating?

It's a function of how supply and demand work in the truckload market.

What's Driving Current Truckload Rate Deflation?
  • Influx of Capacity
    The market has been so tight for the last several quarters (and the spot market so lucrative) that carriers have added capacity into the market to meet demand.
  • Year Over Year Comparisons
    The Coyote Curve measures current spot truckload rates relative to last year. And Q2 2021 was near a record peak for our index, making the current drop look especially severe. That said, actual rates are still declining (see below). 
  • Fuel & Linehaul's Inverse Relationship
    Most spot capacity is procured with "all-in" rates (inclusive of fuel) — carriers don't use a fuel surcharge for one-off loads. Even though fuel has gone up, the relative drop in base rates (exclusive of fuel) is enough that the all-in rates are still down. 
  • Softening Demand for Durable Goods
    COVID-era spending was heavily weighted towards physical goods and less on the service economy (e.g., concerts, bars, restaurants). We're starting to see more people spending their money on experiences and less on durable goods that require shipping.

Want Proof? Let's Look at All-In Rates

Take a look at our Coyote Curve Y/Y spot rate index up against our proprietary all-in cost-per-mile index — this is comparing annual change versus the absolute rate. 

Q2 Coyote Curve Spot Rates Y/Y vs. All-In Cost Per Mile Truckload Rates
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As a reminder, these numbers are informed by real transactional data from over 10,000 daily shipments spanning over 15 years. 

Though still well above pre-pandemic levels (except for the Cycle 4 peak in 2018), the current all-in cost-per-mile is down significantly from just a quarter ago, and would be even more if it weren't for diesel rates.  

Additional Proof Points of a Stabilizing Market (As Seen in the Coyote Network)
  • Produce season was muted.
    Most years, we see huge Q2 rate spikes out of the southeast to support produce shipping demand. This year was ~5% lower than is typical.
  • Memorial Day was the only blip.
    We saw 17 consecutive weeks of sequential (week-to-week) decline in rates before holiday demand, coupled with DOT week, finally broke it.
  • 4th of July brought no fireworks. 
    Usually, we get a ~9% increase in spot rate activity leading into the summer shipping holiday. This year, we were under 4%, the least volatile we've seen in a decade. 


Demand: Key Economic Indicators Driving the Truckload Market

If one word encapsulates the Q2 2022 economy, it's inflation. But as we've laid out above, the truckload market and the wider economy are not always coupled. 

And the opposite can be true — we've had several economic recessions with inflationary truckload markets. 

We'll examine some of the core macroeconomic indicators and put them into context of the truckload market, before examining the supply-side factors driving this apparent anomaly. 

Q2 2022 industrial production, inventory to sales, imports and consumer spending on how it impacts the truckload market
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Consumer Spending

After a couple quarters of growth, consumption is showing signs of slowing, dipping down slightly from 12.8% at the end of Q1 to 11.3% through June. This is partially driven by inflation.

As previously mentioned, we're also seeing a rebalancing of consumer spending on durable goods versus services, which is always top-of-mind for truckload shipping.

Durable goods was actually deflationary at the end of Q1, which was the first time since before COVID-19 struck. As people spend more on experiences and less on physical goods, truckload demand eases off.

Industrial Production (IP)

Consumer spending, particularly on durable goods, drives production. Heading into Q3, production is healthy for the time being (ending Q1 at 4.4%), and is not pointing toward a recession, but if consumer spending takes a dive, expect IP to follow.


With chaos in international shipping markets over the past two years, this indicator has been particularly volatile. After hitting a high of 30.6% last year, imports are down to 8.1% at the end of Q1, and trending slightly up through June (10.6%). 

The port congestion is starting to clear up, helped by fewer sailings from China due to COVID lockdowns, but with peak season approaching, there could be another volume spike this quarter.


Over the past two years, to combat overall supply chain volatility and high demand, shippers have been working to build up inventory. 

Now they've stocked up on key items, carrying costs are starting to go up, driven by an increase in interest rates (the Fed's response to inflation). Now, businesses are trying to shed any excess inventory.

This indicator is now coming to the forefront due to the pressure it will put on shippers' bottom lines.

Economy Takeaway
People are spending more in the service sector and less on physical goods. As these rebalance, overall inflation may be starting to impact consumer spending, though production and imports are still strong.

Shippers are going to start struggling with inventory carrying costs, however, due to higher interest rates. 


5 Truckload Market Trends to Watch in Q3

As we've outlined, we are seeing several tell-tale signs of a stabilizing market and the deflationary leg of the truckload market cycle. 

Before we dive into the updated Q3 forecast, let's unpack a few of the key trends that will be impacting the market this quarter. 

1. Diesel Fuel

Diesel fuel, which represents around 30% of a carrier’s overall cost, can have a huge impact on profitability if it rises or falls faster than rates.

At the end of Q2, diesel was up ~150% Y/Y, and up 40% from Q1.

Y/Y diesel changes
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If fuel continues to remain this elevated, it could drive more capacity out of the market sooner while spot rates continue to drop.

This would push the lower inflection point for a deflationary truckload market farther into the future and elevate the floor that rates can eventually fall to.


2. Class 8 Truck Orders

After historically long backlogs throughout 2021, supply chain shortages are easing and truck orders are starting to be fulfilled. 

Carriers who wanted to replace old equipment or add net new capacity are getting trucks in their lot.

Class 8 tl tractor cycles vs. spot rates

For some, this will be an issue as we head deeper into a deflationary market — the market they bought those trucks in will look very different than the one they'll be trying to fill them in.

We're already seeing orders start to fall off a cliff. For carriers that added equipment, they will have to take on this new fixed cost with diminishing spot rates and high fuel, all of which could contribute to truckload market insolvency (and the next inflationary leg of the cycle). 

3. Inventory levels

We covered this in detail above, but to reiterate: Shippers have built up inventory to combat supply chain volatility, but now the carrying costs are much higher due to higher interest rates (a result of the Fed's push against inflation). 

As we approach peak season, shippers will be walking a fine line between meeting customer demand with properly positioned stock and keeping costs down. 

4. Port Activity

The most widely publicized supply chain disruption over the past year, the heavy congestion outside the ports of Los Angeles and Long Beach (the busiest ports in North America) has been an ongoing issue — but we've finally seen some improvement. 

Though imports are still strong, COVID-driven lockdowns in China have given the ports a reprieve to work down some congestion. This is good, because there are three things that could impact port shipping this quarter:

  • Peak season shipping is about to begin in earnest.
  • AB5 could have a significant impact on California trucking (particularly drayage) rates and capacity.  
  • Labor negotiations with the International Longshore and Warehouse Union (ILWU) and the port are about to begin. 
5. Contract vs. Spot Rates

Though spot rates are already deflationary, contract rates remain strong, as is common at this point in the cycle. Whenever there is a divergence between the two, whether on the way up or down, volatility ensues. 

Once we hit Labor Day in September and shippers start looking toward their next transportation bid cycle, we're likely going to see contract rates fall significantly. 

Carriers that are currently enjoying high primary rates and have been less affected by declining spot will start to feel the crunch, especially if they have new equipment on the books (i.e., fixed costs). Again, this will contribute to the next inflationary leg of the cycle. 

Truckload Trends Takeaway
An influx of new trucks, higher diesel and (likely) dropping contract rates will all contribute to continued deflation in the truckload market. 


Q3 2022 Truckload Market Forecast

We've covered the current state, the macroeconomic environment, and key trends — but where does it leave us for the rest of the quarter? 

Let's look at the forecast.

Q3 Freight Market Forecast
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We expect spot rates to continue to deflate, likely hitting the bottom in Q4.

An important caveat: Once Q4 rolls around, we'll be comparing ourselves to all-time highs set in 2021, so the drop may appear a bit more dramatic than you'll actually experience. 

So how much are all-in rates going to slide? We anticipate that there is still a little more to go from the current state, but we are likely close to the deflationary inflection. 

We anticipate spot rates will continue to trend downwards as we enter the second half of the year. If we spend another two or three quarters in spot and contract rate deflation, it will likely push capacity out of the market, leading to the start of the next cycle in early 2023. 


What Can You Do? 

There is no silver bullet or special trick — it comes down to fundamentals.

Use the (relative) lull in pre-peak shipping environment to maximize planning and communication with your core freight providers.

You really need to be in it together to keep your costs under control. 

Where do you need your inventory? What's the biggest priority? Do your carriers all know this now, so they can help you in Q4?

Are you sharing your data? Don't try to hold onto any secret sauce — we're all trying to solve for the same shipping problems, and the more collaboration the better. 

Want to learn more about how your peers are using supply chain data? Get insights from over 1,500 shipping pros in our KPI benchmarking research study.

Show Me the KPI Research

Forecast Takeaway
We've entered a deflationary spot market and will likely stay there for the next few quarters. Contract rates will follow, and capacity will start to exit the market, setting up the next inflationary rate environment, likely in early-to-mid 2023. 


Watch Freight Market Experts

This session originally aired during the Q2 Supply Chain Master Series.

Watch now to get insights from supply chain pros at Coyote, UPS and CSCMP as they dive into truckload, parcel, LTL, intermodal and international shipping trends for Q3.


Truckload Market 101

These three helpful resources will help you learn about truckload market fundamentals and how we build our proprietary index. 

If you're new to the Coyote Curve, take a few minutes to familiarize yourself with this foundational content:

Part I: Supply & Demand 101: Basics of Truckload Market Economics
Part II: Understanding the U.S. Truckload Market
Part III: Explaining the Coyote Curve

*We use the Cass Truckload Linehaul index as a proxy for contract rate performance.