Without getting into a discussion about where rates should or should not be, why don't we examine why carriers have been accepting the low rates described by Rob and Michael above? There is no excuse for any broker to purposely offer a ridiculously low rate if they could afford to pay more. But is there any excuse for a carrier to willingly accept such a low number? My point is, who is to blame here? The person offering, or the person accepting?
It is simple supply and demand.
Since 2004, except for a very short blip on a northbound load about 3 years ago, there has been more trucks than freight. The guy paying for the freight can mass email blast his load to a number of brokers who then strip the senders name off and forward it to all the carriers in their system. There was very little discussion about obtaining a good carrier who can do the lane consistently and to be honest, why would they. If the opportunity presented itself to make an additional buck off of a carrier who would lower their price because the freight fit their process this one time they'd do it. I cannot count the times that I was asked from brokers and customers for our 'absolute best price' only to find that when they put my price in the excel spreadsheet and sort it I was not the top person. In the end, freight rates are at a level that is barely above the minimum that anyone will take the freight. Basically this process over time have matured the spot market as the only way to move freight.
Carriers have been moving freight at a very tight margin for years. Any additional costs, for the most part, was expected to be absorbed by the carrier. (Border detention, additional wait time, straps, bars, etc) In a spot market any additional costs such as fuel, drivers wages, insurance, took a long time to work its way through the system.
Now, for a number of reasons, (ELD, strong economy, driver shortage, weather, insurance spike, fill in the blank here______, etc) there is more freight than trucks. Those carriers who use the spot market are getting calls left right and center. Carriers no longer have to take the freight offered to them at the rate that it was done for last time. Carriers do not have to wait anymore for a broker to call their customer to see if the freight is available because some other customer will have cost effective freight somewhere that is feasible to commit to and move the truck.
Supply and demand will keep things in check. I'm sure that the reasons pushing the freight rates will subside and rates will stabilize. It only has to be a small percentage of excess freight or excess trucks to swing the prices dramatically. Remember it has only been this way for 3 weeks. If it was the other way around with no freight; trucks would just sit idle as they have done many times in the past - only for that cost to be absorbed by the carrier. In the meantime, I'm real happy that I can have a candid discussion with my customers about what drives the costs and how they have taken advantage of the spot market for a very long time.
