Is that a speed bump ahead, or a cliff?

Alain Bedard isn’t losing sleep over a freight recession. The chairman and CEO of Canada’s largest fleet, TFI International, parried questions from analysts about a softening freight market during a first quarter earnings call.

The term “bloodbath” has been flipped around loosely of late, largely due to skyrocketing diesel prices and falling spot market rates. So much so, that industry forecaster ACT Research addressed such prognostications in a recent report.

“Following the publication of a ‘the sky is falling’ op-ed in a transportation industry trade publication, ACT’s staff received any number of questions relating to cycle length,” ACT said in an accompanying release.

But first, why all the doom and gloom?

Two things are driving the negative narrative: Sharply falling spot market rates and fast-rising diesel prices. But while it’s true spot market rates are on the decline in recent weeks, DAT Freight & Analytics reports they remain above year-ago levels and that contract rates are at record highs.

“What made March unique is that shippers paid historically high prices to ensure that more of their loads moved under a longer-term contract, reducing their need for trucks on the spot market and causing rates to soften,” said Ken Adamo, DAT’s chief of analytics. “At the same time, carriers’ operating costs increased because of higher fuel prices.”

Spot market freight volumes remained robust, though there’s been an increase in trucks available to move those loads.

Responding to doomsday reports, Kenny Vieth, ACT’s president and senior analyst had this to say: “Recognizing the uptick in caution flags, there is still much to like about the current situation. On the freight front, there are two points to make: First, carrier profits were at all-time record levels in 2021, and [truckload] fleet contract rates are still expected to rise double digits this year. The second point is used vehicle prices. We are likely near the top, and valuations are likely to fall as freight market constraints ease, but currently used inventories are half their year-ago levels, which will cushion that decline. And, when freight volumes do roll off, there is considerable high-priced capacity that is likely to exit the market, thereby putting a pretty high floor under freight rates.”

Bumpy road ahead

For his part, Bedard told analysts, “When I look at our results from April, we don’t see a freight recession at all. We see a shortage of drivers and a shortage of power. Customers are asking us can you please help us in servicing our customers.”

But aren’t spot market rates a leading indicator of where contract rates will go? Not this time, counters Bedard.

“If you look at history, you’re absolutely right – when spot starts to come down, contract rates follow. But that’s based on one thing that does not exist today, which is availability of power and availability of people,” he said. “Yes, spot rates are down a bit. OK. But when we talk to customers, we don’t talk too much about price right now, we talk more about ‘Can you provide the service?’”

Bedard predicts it’ll be 2023 at least until there’s a meaningful freight recession, which is too distant in the future to anticipate with certainty. But he did add “small truckers are in a very difficult position.”

Those smaller trucking firms that heavily rely on the spot market for loads, and who don’t have the cash flow to offset fast-rising diesel prices, are more vulnerable.

“Small trucking companies and independent operators experienced significantly higher operating costs and lower revenues than they’ve become accustomed to over the past couple of years,” agreed DAT’s Adamo.

And there are a lot of those vulnerable companies out there. The U.S. Federal Motor Carrier Safety Administration authorized an unprecedented 165,000 new carriers since July 2020. Many of those are single-truck operators who left larger carriers to chase hot spot market rates.

Those operations are about to undergo a nasty stress test, which many will ultimately not survive. So, while Bedard may not be losing sleep about a freight recession, the same can’t be said for everyone.

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James Menzies is editor of Today's Trucking. He has been covering the Canadian trucking industry for more than 20 years and holds a CDL. Reach him at or follow him on Twitter at @JamesMenzies.

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  • Well said many owner ops and those under 20 trucks in ont are still having more trucks parked. We don’t need more foreign drivers just