So we’re at or near the bottom on spot rates. And now the question becomes, Tom, when do those rates start to crest up and when do we see the inflection point. If you look at the last couple of cycles, in 2017, it was in July or August of 2017 that spot rates came through the inflection point from the bottom and came through contract rates. And then they spiked and they hit their peak by August of 2018, and then they were back down. Whereas in a post ELD world, we saw this happen in the June, July of 2020 is when spot rates came off the bottom, and they intersected contract rates that were higher at the time. And then those rates continued to move forward up until January of 2022, which is when spot rates officially peaked before they started to decline for the 12 consecutive months, as I mentioned.
And so I think now we find ourselves where those spot rates have come off, contract rates have really held in there, probably due in large part to the value of trailer pools. And now those spot rates are poised and if not have started to make their way back up to an intersection point. And what we know is once they intersect, we begin to enter a period of positive rates, not only in spot rates but start to see positive contractual rates. And then the question becomes, how long do you go until that peaks again? And that has everything to do with broader economic demand and to what degree do carriers oversupply their fleets by buying too many trucks and trailers, which I will tell you for the, I don’t know, third consecutive year, purchasing new equipment still is on allocation.
So it is not a free-for-all. And the cost is much higher to say nothing for the impact of interest rates. So Tom, probably a 10-pound answer for a five-pound question, but that was some feedback.
Operator: Your next question comes from the line of Todd Fowler from KeyBanc Capital Markets.
Todd Fowler: Maybe just to pick up — and Adam, I think you touched on this on the first question. Dave, you touched on this a little bit to Tom’s response. But thinking about your commentary on revenue per mile and the high single-digit declines to start the year and then an inflecting positive, how do you have that parsed out between contract and spot? And what are you seeing right now on kind of the contract renewal pricing side? How is that working through the numbers as we move through the revenue for model assumptions for the year?
Adam Miller: Yes. I think — so Tom, there’s — or Todd, sorry, there’s very little spot opportunity in our expectation in the first half of this year. So most of that decline will be a result of contract renewals. And it’s still early on in the bid season, and so we haven’t had too many final awards. So those are still more — those declines are more anticipated than what we actually have received. And so we’re still in the early phases of that and having good dialogue with our customers. And then our expectation is in the back half of the year, some of the improvements in rate will come from contract renewals, but more or less the spot rate improving and then some of the projects that we typically participate in, in the fourth quarter.
Todd Fowler: And Adam, just a follow-up on that comment. So on the contract side, what is a reasonable expectation for contracts this year, I mean, just given the spread right now between spot and contract?
Adam Miller: Yes. Again, we’re still kind of filling it out to the bid. So I don’t want to put a number on that right now. We’re still kind of understanding — it really depends, Todd, on when we renewed the contract with that customer. I think the early parts of the bid season, that number will be larger. The higher single digits will be lower double digit. And as the bid season progresses, that number gets reduced.
