Create a free Overdrive account to continue reading

Celadon freight likely to be a blip on the spot market, if anything

user-gravatar Headshot
celadon-e1556223469219-2019-12-10-16-57

While Celadon’s sudden closure left thousands hunting for jobs, it also left its shipper customers hunting new options to move their freight.

Likely, much of that freight will land on the spot market in the near-term, until Celadon’s customers can get their freight back under contract elsewhere.

But even with a carrier of Celadon’s size and with the amount of freight it hauls each week, its closure’s impact on the spot market will likely be negligible, even with an influx of freight from Celadon’s former shippers.

Peggy Dorf, senior analyst at DAT, said the fleet’s closure could cause some temporary hang-ups in isolated markets or lanes, “but at the national level, even 3,000 trucks don’t have a big impact on capacity or rates in today’s market conditions,” she says.

The market has also already entered holiday mode, with rates “trending up sharply” in recent weeks, says Dorf. “The Celadon bankruptcy falls right in the middle,” of Christmas and Thanksgiving, she says, “making it hard to separate its impact from the overall trend.”

“This is not the kind of thing that’s going to move the market in any meaningful way,” says Avery Vise, vice president of trucking at FTR. “The general truckload market is so large, even a failure of Celadon’s size is not going to change the market substantially.”

However, there could be short-lived spot market issues, he says, particularly because capacity is currently tight on the spot market, near a record-low in terms of available trucks, Vise says. “We already saw coming out of Thanksgiving some very high imbalances in the market that were principally related to how tight capacity is in the spot market.”

The spot market isn’t as fluid as it historically has been, Vise says. Thus “when we have a big disruption like a carrier with thousands of trucks going out of business … there’s potential” for a brief spot market impact.

Any capacity or rates changes will be short-lived, says Vise, especially the time of year. Trucking is already equipped to handle the influx of freight that comes leading up to Thanksgiving and Christmas.

Jim Nicholson, VP of operations at digital freight broker Loadsmart, concurs that any impact on the domestic spot market will be negligible. However, he says, Celadon was one of the largest cross-border freight carriers operating between U.S. and Mexico. The fleet’s closure “absolutely may create capacity issues in the short-term for U.S.-Mexico cross-border activity,” he says.

Showcase your workhorse
Add a photo of your rig to our Reader Rigs collection to share it with your peers and the world. Tell us the story behind the truck and your business to help build its story.
Submit Your Rig
Reader Rig Submission