Class 8 truck orders and spot rates have a direct relationship: When one goes up, the other goes up; when one goes down, so does the other.

"I think it's relatively obvious," Donald Broughton, the principal and managing partner at Broughton Capital, told Supply Chain Dive in an interview. "When you have limited resources, you don't spend money, and you certainly don't spend frivolously."

Higher spot rates, on the other hand, are a sign carriers are bringing in more money. When a business has more money on hand, it's more willing to invest in new trucks or pay raises, Broughton said.

At the end of the day, though, is this relationship been rates and Class 8 orders really something shippers need to concern themselves with?

"The answer is an emphatic yes," Tim Denoyer, vice president and senior analyst at ACT Research, told Supply Chain Dive in an interview.

Shippers need to meet their budgets, Denoyer said. If a shipper understands where Class 8 orders are and where spot rates are, they will have a decent forecast of where contract rates are headed.

Spot rates can act as a leading indicator of contract rates. For every 2% change in spot prices, the contract rates will change by about 1%, Denoyer said. Changes in contract rates tend to lag behind changes in spot rates by about six months. There also needs to be a sustained trend in spot rates to affect contract rates, he said.

Denoyer said ACT Research advised shippers to hold off on signing contracts earlier this year and suggested they move freight into the spot market while rates were low to save money. "Now, you know, if a capacity crunch were to come along, then we would advise the exact opposite," he said. "We say you do not want spot exposure because it could spike."

Class 8 orders can help shippers get a picture of the market's capacity, Denoyer explained. Every year, the trucking market averages 135,000 to 140,000 new Class 8 trucks sold in the U.S. If this number is larger or smaller, it could signal an expansion or contraction in capacity. This year, capacity has expanded because the cash flow for carriers was strong in 2018 and they bought more trucks. (It's important to note not all orders signal growth in capacity. Replacing old trucks differs from growing a fleet. Figuring out this replacement number is a matter of tracking Class 8 trends over time.)

"Price is really the mechanism that is a signal to the truckers, especially spot prices, that now may not be the best time to order the trucks," Denoyer said.

When ACT Research measures the supply and demand of freight, it uses Class 8 orders to look at supply and American Trucking Associations' freight index to look at demand. Recently, ACT Research's supply and demand balance has been negative, meaning supply exceeds demand, because fleets have been growing faster than any uptick in freight. And what tends to track along with this supply and demand balance? Spot rates, of course.

Orders of Class 8 trucks have already begun to slow down, which means fleet growth could begin to slow, though there's no sign of a capacity correction yet, according to Denoyer. This, combined with some low-single-digit freight volume growth, could help lead to the supply and demand balance heading back into the positive territory by mid 2020, he said.