Posts Tagged “truck rates”
Truckload freight volumes hit new highs in June and spot and contract rates stayed in record territory as surging retail imports and peak produce shipments fueled demand for transportation services, according to DAT Freight & Analytics, operator of the largest truckload freight marketplace in North America.
The DAT Truckload Volume Index was 237 in June, an 11% increase compared to May and a record high. The Index is an aggregated measure of dry van, refrigerated (“reefer”) and flatbed loads moved by truckload carriers and an industry-standard indicator of commercial freight activity. A baseline of 100 reflects freight volume in January 2015.
Super High Rates
The national average rate for van loads on the DAT One load board network was $2.68 per mile in June, down 1 cent from the all-time high in May (all rates include a fuel surcharge).
The national average spot rate for refrigerated freight fell 1 cent to $3.10 per mile month over month while the flatbed rate increased 3 cents to $3.15.
Contract truckload rates set records for all three equipment types. The average van rate was $2.73 per mile, up 6 cents compared to May. The contract reefer rate increased 3 cents to $2.88 per mile, while the flatbed rate jumped 7 cents to $3.10 per mile.
Spot load postings decline as more freight moves under contract.
Overall truckload volumes increased last month but the number of loads posted to the DAT One network fell 6.0% compared to May. This marked a shift from the spot market toward more freight moving under contract or other means.
The number of available trucks on DAT One increased 13.2% compared to May. Although capacity remains tight, there are signs that workers are coming back to the industry, with 24,500 new transportation jobs added in June.
With fewer loads on the spot market and more trucks available, load-to-truck ratios declined for all three equipment types. The national average van ratio was 5.6 in June, meaning there were 5.6 available loads for every van posted to the DAT network, down from 6.1 in May. The reefer ratio was 11.6, down from 13.0, and the flatbed ratio slipped from 97.1 in May to 66.8 last month.
In June, shippers faced a supply-driven capacity crunch, said Ken Adamo, Chief of Analytics at DAT: “While the number of trucks posted to the DAT load board network increased significantly in June, overall demand accelerated at a faster pace. The typical seasonal decline in contract and spot rates from now to Thanksgiving looks less likely in 2021.”
Spot truckload rates typically drop after the July 4 holiday with back-to-school and back-to-office retail goods already positioned and produce season past its peak. In some cases, reefer carriers will shift to moving dry van and other types of freight, which could provide relief to retailers seeking transportation services for end-of-year holiday goods.
Usually, 12 to 15% of all truckload volume moves on the spot market. Entering July, that figure is closer to 25% but should tighten as more shippers take a portfolio-based transportation procurement strategy (dedicated, contract and spot, as well as using a mix of both asset and non-asset providers).
Between July 4 and Thanksgiving, weekly truckload volumes of produce typically decline an average of 21%, which translates to reefer carriers hauling 7,300 fewer truckloads per week by the end of November.
Comparing rates entering the market to those exiting shipper routing guides, contract rates were rising at the beginning of July: new routing guide contract rates increased by 7% in the two weeks ending July 1 compared to the prior two-week period. We expect contract rates to remain elevated at least through the fall.
Imported Mexican produce shipments to the U.S. increased by double-digits in the second quarter of 2020, according to a transportation report from the USDA.
The Mexico Transport Cost Indicator Report reveals second quarter total reported shipments of fruits and vegetables from Mexico were 2.96 million tons, an 11 percent increase compared with the second quarter of 2019.
The total of the top five commodities shipped from Mexico (figured on an annual basis: tomatoes, peppers, cucumbers, avocados and squash) increased by 31,000 tons, or 6 percent.
Imported seedless watermelons entering the U.S. in the second quarter topped all fresh produce commodities for the quarter, with 297,000 tons shipped. However, that was down 19 percent from same quarter in 2019.
Truck rates for shipments of 501 miles to 1,500 miles from the Arizona border crossings averaged $2.55 per mile, up 1 percent quarter to quarter, but down 6 percent compared with the second quarter a year ago.
Rates for shipments of 501 miles to 1,500 miles from the Texas border crossings averaged $2.25 per mile, down by 10 percent quarter to quarter and down by 1 percent year to year.
Diesel fuel prices for border crossings through Texas averaged $2.21 per gallon for the quarter, compared with $2.60 per gallon for crossings through Arizona.
Freight volumes and rates took a hit in April thanks to the COVID-19 pandemic., according to transportation analysis firm DAT.
Transportation analysis company DAT of Portland, OR reports in a news release its DAT Truckload Volume Index, a measure of dry van, refrigerated (reefer) and flatbed loads moved by truckload carriers, fell 19 percent from March and 8 percent from April 2019.
“With so many businesses closed or operating at low capacity, truckload shipments have plunged, which put spot rates in dangerously low territory for owner-operators and small carriers,” Ken Adamo, chief of analytics at DAT, said in a news release. “Some carriers parked their trucks to wait for better business conditions, but there’s still lots of available capacity as a result of the low volumes, which has kept rates down.”
The April load-to-truck ratio for vans was 1.0 nationally, which DAT said was the lowest level since February 2016. In fact, for three weeks in April, the ratio was less than 1.0, meaning there were more trucks than freight posted on the DAT network, according to the release.
For the week of April 7, the USDA reported that fruit and vegetable truckload volumes were 110,327 (10,000-pound) units, down from about 147,016 units for the week of April 2 a year ago.
Spot reefer volumes were weak but ended April on an upward trend as fruit and vegetable harvests started to get underway. DAT said the reefer load-to-truck ratio was 1.7 in April compared to 5.6 loads per truck in March, matching at all-time low in April 2017.
The national average reefer spot rate was $1.92 per mile, down 25 cents compared to March and 23 cents lower year over year. according to DAT.
U.S. average diesel costs were much lower, at $2.39 per gallon in early May compared with $3.17 per gallon a year ago.
Truck Demand Should Improve
With the market bottoming out in April, the outlook should improve for truck demand.
Ratecast and Market Conditions Index—predictive metrics from DAT anticipate higher prices and volumes as states relax their stay-at-home orders, produce season begins and port markets like Los Angeles, Houston, Savannah, Ga. and Elizabeth, N.J., see more traffic.
“Carriers will not be able to sustain operations very long at current levels,” Adamo said in the release. “Spring produce shipping should offer some relief and put some needed upward pressure on prices in May.”
California strawberry shipments could exceed last year’s volume thanks to increased plantings and higher yielding varieties.
Strawberry growers planted nearly 27,000 acres of strawberries for winter, spring and summer production this year, about 1,000 acres more than 2019.
The California Strawberry Commission of Watsonville, CA. reports the combination of increased acreage and the introduction of high-yielding varieties offers growers the potential of producing more than last year’s 202 million plus trays.
Ventura County accounts for 19 percent of the state’s acreage, Santa Maria has 35 percent and Watsonville has 45 percent.
As of March 9, the state had shipped nearly 8.5 million trays of strawberries compared to 4.3 million trays at the same time last year.
Well-Pict Inc. of Watsonville, CA was picking in Oxnard the second week of March and the area hit a peak at the end of March.
Santa Maria began loadings in late March, but the crop was slowed due to earlier weather issues. The areais now entering peak shipments.
Meanwhile, Watsonville shipments are ahead of schedule this year.
Red Blossom Sales Inc., Salinas, CA started shipment from Santa Maria the second week of March 9 but was planningt to start picking in Watsonville around April 30, as usual.
Bobalu Berries of Oxnard started its strawberry season in Ventura County and will be shipping from Watsonville in May.
Truck rates from Ventura County have plunged in recent days from 15 to 30 percent, depending on the market. Oxnard rates have dropped over 20 percent – strawberries and vegetables to New York City – about $6200; down 30 percent to Atlanta – now about $3900.
As more trucks become available for hauling, truck rates have experienced a small decline, according to DAT Solutions in a report.
National average spot rates for dry van, reefers, and flatbeds continue to decline, the company reported earlier this month.
Included in the report:
In a typical seasonal slump, the number of trucks on the spot truckload freight market increased 7.4 percent while the number of loads dipped 10 percent during the week ending January 19, said DAT Solutions, which operates the DAT network of load boards.
National average spot rates declined for the second straight week:
– Van: $2.01/mile, down 4 cents
– Flatbed: $2.38/mile, down 4 cents
– Reefer: $2.37/mile, down 5 cents
Truck posts increased 5 percent while load posts fell 15 percent, which caused the load-to-truck ratio to drop from 6.1 to 4.9 loads per truck. It’s been more than six months since the load-to-truck ratio has been below 5 loads per truck.
Average spot rates were down on several key regional reefer lanes and major markets across the country.
– Los Angeles: $2.92/mile, down 11 cents after an 18-cent decline the previous week
– Atlanta: $2.56/mile, down 5 cents
– Lakeland, Fla.: $1.46/mile, down 9 cents
– McAllen, Texas: $2.24/mile, down 7 cents
– Philadelphia: $2.90/mile, down 5 cents
– Chicago: $2.80/mile, down 14 cents after falling 13 cents the previous week
Below are some examples of truck rates from Oxnard, CA over the past year, which charts the decline in truck.
Records for both truck rates and shipping volumes were broken in the second quarter of 2018, according to a new report from the USDA.
The Agricultural Refrigerated Truck Quarterly, reviewed truck rates from April through June this year and provided an outlook for refrigerated trucks through the end of 2018.
“Indicators point to sustained high rates and tight capacity for the trucking industry, including the refrigerated truck market, through the end of 2018 and possibly beyond,” the report said.
In addition, the report said Hurricane Florence may have effects on the truck market in the months ahead, adding pressure to an already tight market.
“With demand for truck services projected to remain high, these combined factors could keep truck capacity scarce and rates high for the foreseeable future,” the report said.
Hauling the freight
Trucks continue to be the dominant carriers of freight, carrying 70.2 percent of domestic freight in 2017, according to the American Trucking Associations. Strong economic growth kept truckers rolling in the first half of the year, as real gross domestic product increased 4.2 percent in the second quarter of 2018, the USDA reported.
While the economy was heating up, unemployment reached a 10-year low of 3.8 percent in May.
Construction, manufacturing, or local driving positions through ride-sharing services offer competition to long-haul trucking positions.
Some trucking companies have increased drivers’ wages as a result.
Through the first half of 2018, ATA reported the freight tonnage hauled by trucks increased 7.9 percent,up from a 3.8 percent increase in 2017.
The report said DAT Solutions reported strong demand for trucking services caused truckload spot rates to reach a record high in June, topping a 15-month run of spot market rate increases. In the refrigerated truck market, DAT reported the national average spot market truck rate hit the highest point ever recorded, at $2.69 per mile in June, up $0.58 from June 2017, and $0.11 higher than the contract rate. While increases in contract rates typically lag four to six months, after a sustained increase in spot market rates, this year the lag has been only a few weeks.
Refrigerated truck market
Strong demand for trucks and large volumes has mostly affected truck rates for shipments of 500 to 2,500 miles, according to the USDA. The U.S. average refrigerated truck rate reached a record high in the second quarter, for shipments between 501 and 1,500 miles ($2.96 per mile), up 12 percent from the previous quarter ($2.64 per mile).
The U.S. average truck rate for shipments between 1,501 and 2,500 miles was still higher than usual at $2.45 per mile, but was 3 percent lower than the record high of $2.54 per mile, set in the first quarter of 2018. In contrast, average truck rates for shipments less than 500 miles, and over 2,500 miles, have remained within normal ranges.
Fruit and vegetable shipments
Reported U.S. truck shipments of fresh produce during the second quarter of 2018 were a record 9.65 million tons, 21 percent higher than the previous quarter, and 1 percent higher than the same quarter last year.
Shipments from Mexico were the highest in the second quarter, totaling 2.85 million tons and accounting for 30 pecent of the total reported shipments of fresh fruits and vegetables. Loadings from California totaled 2.24 million tons, accounting for 23 percent of the reported shipments. Movements from the Pacific Northwest totaled 1.55 million tons, representing 16 percent of the reported total.
The study noted until 10 years ago, California and Florida were the two biggest suppliers of fresh fruit and vegetables, during the second quarter. In recent years, both states have lost market share to the Pacific Northwest and Mexico, the USDA said.
The volume of shipments from Mexico through Texas reached a new high of 1.30 million tons during the second quarter of 2018, an increase of 8 pecent over the same period last year (1.21 million tons).
Five commodities accounted for 42 percent of the reported truck movements during the second quarter of 2018:
- Watermelons, seedless (11 percent);
- Potatoes (11 pecent);
- Apples (8 percent);
- Onions, dry (7 percent); and
- Strawberries (4 percent).
Playing the spot market with freight rates on fresh produce is common with owner operators and small fleet owners. However, refrigerated fleets for years have often negotiated seasonal, if not year around rates.
The fleets see advantages to having more predictable produce rates with higher rates in the slower winter months, but lower ones during the peak shipping seasons of spring and summer.
However, record produce rates this past year has changed ways of doing business, not only for the fleets, but the produce shippers. For example, uncertainty surrounding freight rates has resulted in some Idaho grower-shippers of potatoes to shy away from quoting delivered prices for potato price contracts.
Sun-Glo of Idaho Inc., in Sugar City, has chosen not to take on the risk of volatile transportation rates by quoting delivered prices. The company has found trucking companies refusing to quote set rates, because of the uncertainties in trucking. If those fleets are unwilling to take the risk of contract rates, then the grower-shippers are not going to risk giving delivered prices.
Much higher truck rates have occurred, at least in part, by the implementation of electronic logging device (ELD) regulations last year. Higher truck rates is one of the biggest complaints of grower-shippers. Instead, companies such as Sun-Glo are quoting prices for their potatoes, something which they are in control.
Other shippers are doing business in a similar fashion. Wada Farms Marketing Group LLC of Idaho Falls, ID has indicated it may lose some customers this shipping season because Wada no longer is offering a delivered price contract. It has some contracts with trucking companies to haul potatoes, but it is on a month-to-month contract basis. Six month to one year contracts with truckers has become a rarity. Since Wade Farms cannot get seasonal or yearly contracts with trucking companies, it is avoiding offering delivered price contracts to customers.
Wade Farms has even inserted some flexibility clauses into contracts. For example. if there is an extreme shortage of trucks or holiday overages, it is not locked in to the same price.
Shippers have long complained of retail chains driving down prices on the produce they purchase. Potandon Produce LLC of Idaho Falls, ID has pointed out in the current truck rate environments, some retailers are looking to drive down f.o.b. prices to maintain delivered costs.
In a effort to cut shipping costs Potandon say if offers potato buyers a premium Idaho potato, or it can source spuds from 16 other states which may be closer to their customers. The company continues to seek alternative shipping methods to cut costs.
Potandon is still offering customers delivered prices and says it has the advantage of an in-house transportation department which is in constant contact with freight carriers to get the amount of trucks needed.
Trucking produce rates set some historic highs during the summer. While rates have declined since then they still remain will above the level of 2017.
For example, Mexican citrus, watermelons and vegetables crossing into the Lower Rio Grande Valley of Texas were $4800 to $5000 in mid August compared to $7800 to $8500 in the middle of June.
Salinas-Watsonville vegetables and strawberries were grossing $9100 to $10000 in mid June to Baltimore, but has dropped to mostly $8,100 in mid-August.
Washington’s Yakima Valley apples, pears and stone fruit were grossing about $8200 to Boston in mid-June, off from about $7,800 in mid-August.
While rates have come down from mid- and late June peaks, they have stayed high compared to previous years.
Historically, summer produce rates reach a peak in May or June and start tapering off in July. This year was no different. Historic peak rates in June of $2.70 per mile had dropped to $2.59 per mile in July, which includes fuel surcharges. Still the July 2018 produce trucking rates were 25 percent higher than the same period in 2017.
With the close of August no serious truck shortages from major produce shipping areas were being reported. August rates were averaging $2.50 per mile, which was still higher than any period on record prior to this year.
Close observers of truck rates believe rates will continue to remain higher than in past years with reasons ranging from higher wages for drivers, ever increasing truck regulations, and a soaring economy with low unemployment. Additionally, there’s more competition for trucks from dry freight with the improved economy.
With the arrival of fall comes additional demand for equipment due to back-to-school activities, Halloween and demand for perishables from foodservices entities ranging from restaurant chains to school cafeterias. Fall crops ranging from apples to pumpkins and potatoes also increase demand for trucks.
While truck rates typically decline overall in the fall, some observers believe rates will remain higher, perhaps as much as 20 percent for the same time a year ago.
Historically, the produce industry gives truck transportation and trucking rates little thought, unless they are having a problem getting their product loaded, or rates are on the rise. Well, both are happening.
For example, several Northwest potato shippers have recently expressed concerns over what it cost to ship their potatoes. They say the situation has become enough of a concern in various parts of the country that more regional potato crops are being plants. Being closer to major markets means less transportation costs.
Valley Pride Sales LLC of Burlington, WA recently complained about short truck supplies and is concerned the situation will not be improving anytime soon. They also hear about a shortage of drivers. The company has seen freight rates to East Coast for russet potatoes costing $9 per 50-pound carton. This is seen as given potato shippers on the East Coast an advantage in the marketplace since they pay less for trucks.
New York Trucking Concerns
As with most companies in the produce industry, New York produce operations have seen escalating truck rates since 2017. However, shippers there are complaining less than shippers elsewhere. This is due to their location of being much closer to major Eastern metropolitan regions than Western and Midwest produce shipper.
For example, Torrey Farms Inc., of Elba, N.Y. observes the proximity to Eastern markets places their operation with many within five to six hours drive time. The company believes transportation will be a battle all summer long N.Y. While Torrey Farms typically has adequate trucks during June and July, by the start of July truck supplies already were tight this year.
New regulations that implemented electronic logging device mandates has made it harder for truckers reports Paul Marshall Produce Inc. of Batavia, N.Y. The trucking company notes two years ago the trucking lane from Elba to Chicago was pretty steady at $1,000 per load. In the summer of 2017, those rates escalated to $1,600.
At Turek Farms of King Ferry, N.Y., truck rates during the July Fourth holiday period were up 20 to 25 percent compared with a year ago. The company notes the new electronic logging device mandate rules mean adding another day to any trucking route more than 500 or 600 miles.
Higher freight rates, particularly from western shipping states, are making Michigan summer produce more attractive to buyers and receivers. The result is boosting Michigan produce demand and truck rates, because of the freight advantage of being closer to markets in the eastern half of the U.S.
The electronic logging device (ELD)mandate also is created with making trucking cost significantly more expensive.
For example, E. Miedema & Sons of Byron Center, MI will be shipping more summer vegetables to markets closer to home. Michigan sweet corn shippers have a significant freight advantage over Florida corn to midwestern markets. Sometimes Florida corn may cost as much in freight as the f.o.b. Additionally, shipping to closer markets means the corn is that much fresher. Sweet corn will not start for a few more weeks.
Superior Sales of Hudsonville, MI is another shipper noticing higher freight rates determining where receivers source their product.
Van Solkema Produce of Byron Center, MI is another shipper finding more interest in their Michigan grown produce in part due to the lower transportation costs.
As a result over the past five years the shipper has started handling items beyond the traditional staple produce items such as brussel sprouts and green onions.
Naturipe Farms of Estero, FL also handles Michigan blueberries. They ship Michigan “blues” to practically every major midwestern retail chain.
Michigan asparagus shipments also has experienced changes in the last few years. Michigan “grass” used to be known as a local product with distribution mainly limited to in-state receivers. It eventually widened its appeal and extended to markets on the east coast. This season a significant amount of Michigan asparagus is being shipped to destinations west of the Mississippi River. There are now even a couple of West Coast companies that are marketing asparagus for Michigan shippers. The asparagus season in Michigan is just wrapping up.