Why supply affect freight rate in transport?

Supply affects freight rates in transport because it directly influences the balance between available transportation capacity and the demand for shipping goods. When supply is high—such as during periods of increased shipping capacity or fewer shipments—freight rates typically decrease as carriers compete for business. Conversely, when supply is low due to limited capacity or high demand for shipping services, freight rates tend to rise as shippers are willing to pay more for available space. This dynamic creates a responsive pricing environment in the freight market.