Posts Tagged “freight volumes”
BEAVERTON, OR — Truckload freight volumes and spot rates held firm in June while contract rates fell to their lowest points in almost two years, according to DAT Freight & Analytics, operators of the industry’s largest online freight marketplace and DAT iQ data analytics service.
“The gap between spot and contract rates was the narrowest since April 2022,” said Ken Adamo, DAT Chief of Analytics. “Rates for van and refrigerated freight increased for the third straight month, and volumes were almost unchanged from May. These are signs that spot truckload prices have reached the bottom of the current freight cycle.”
The national benchmark contract rate for dry van freight has not increased for 12 consecutive months. At $2.58 per mile, the rate was 70 cents lower than a year ago.
Volumes held steady in June
The DAT Truckload Volume Index (TVI), an indicator of loads moved during a given month, decreased marginally for van and refrigerated (“reefer”) freight and increased slightly for flatbed loads:
- Van TVI: 230, down 1% from May
- Reefer TVI: 167, down 3% from May
- Flatbed TVI: 267, up 2% from May
Van, reefer rates improved
On the spot market, the national benchmark rates for van and reefer freight rose while the flatbed rate declined compared to May:
- Spot van rate: $2.08 per mile, up 3 cents, the first increase in five months
- Spot reefer rate: $2.47 a mile, up 3 cents
- Spot flatbed rate: $2.61 a mile, down 4 cents
Van line haul rates averaged $1.65 a mile, up 4 cents compared to May, while reefer line haul rates averaged $2.01 a mile, up 5 cents. The flatbed line haul rate dipped 2 cents to $2.10 a mile. Line haul rates subtract an amount equal to an average fuel surcharge. Lower diesel prices in June pushed fuel surcharges to 17-month lows, averaging 43 cents a mile for van freight, 46 cents for reefers, and 51 cents for flatbeds.
Load-to-truck ratios reflected seasonal demand
Load-to-truck ratios reflect truckload supply and demand on the DAT One marketplace:
- The national average van load-to-truck ratio was 2.6, meaning there were 2.6 loads for every van posted to the DAT One marketplace last month. The ratio was 2.5 in May and 3.9 in June 2022.
- The reefer ratio averaged 3.8, up from 3.6 in May and down from 7.0 in June 2022.
- The flatbed ratio fell to 9.7, down from 11.7 in May and 37.6 in June 2022.
“Demand for truckload services typically slows at this time of year, but this could change quickly given the threat of strikes in the parcel and less-than-truckload sectors,” Adamo said. “Shippers are putting contingency plans in place and would look to freight brokers and carriers on the spot market to keep their line haul operations moving. Demand for trucks would jump, especially around Louisville, Memphis, Indianapolis, Dallas and other major parcel hubs.”
About the DAT Truckload Volume Index
The DAT Truckload Volume Index reflects the change in the number of loads with a pickup date during that month; the actual index number is normalized each month to accommodate any new data sources without distortion. A baseline of 100 equals the number of loads moved in January 2015, as recorded in DAT RateView, a truckload pricing database and analysis tool with rates paid on an average of 3 million loads per month.
Spot truckload rates are negotiated for each load and paid to the carrier by a freight broker. National average spot rates are derived from payments to carriers by freight brokers, third-party logistics providers and other transportation buyers for hauls of 250 miles or more with a pickup date during the month reported. DAT’s rate analysis is based on $150 billion in annualized freight transactions.
About DAT Freight & Analytics
DAT Freight & Analytics operates the largest truckload freight marketplace in North America. Shippers, transportation brokers, carriers, news organizations and industry analysts rely on DAT for market trends and data insights based on more than 400 million freight matches and a database of $150 billion in annual market transactions.
Founded in 1978, DAT is a business unit of Roper Technologies (Nasdaq: ROP), a constituent of the S&P 500 and Fortune 1000 indices.
DAT Freight & Analytics reports truckload freight volumes declined and national average spot rates for refrigerated loads fell for the fourth consecutive month in April.
The DAT Truckload Volume Index, a measure of loads moved during a given month, was lower for all three equipment types:
- Van TVI was 206, down 15.5% from March and 12.3% lower year over year.
- Reefer TVI fell to 154, a 16.3% decline from March and 12.5% lower year over year.
- Flatbed TVI was 239, 13.7% lower compared to March but 3.5% higher year over year.
It’s not unusual for truckload freight volumes to decline from March to April, according to the DAT report.
The van and reefer TVI numbers were the lowest since February 2021, when a polar vortex and unprecedented winter storms disrupted logistics activity across large areas of the U.S. and Canada.
“May will be pivotal for shippers, brokers and carriers,” Ken Adamo, DAT’s chief of analytics, said in the release. “After a challenging first four months of the year, we expect to see the effects of seasonality on freight volumes and rates. The question is how sustainable those effects will be.”
National average load-to-truck ratios decreased, indicating weaker demand for truckload capacity on the spot market.
The last time van and reefer ratios were this low was in May and April 2020, respectively, during the supply chain shocks of the pandemic:
- The van ratio was 1.9, down from 2.0 in March, and 3.4 in April 2022.
- The reefer ratio was 2.7, down from 3.0 in March and 6.3 year over year.
- The flatbed ratio was 12.1, down from 12.1 in March and 64.5 year over year.
Lower demand for truckload services led to a drop in national average spot van and reefer rates, the report said:
- The spot van rate averaged $2.06 per mile, down 10 cents compared to March and 71 cents lower year over year.
- The spot reefer rate fell 9 cents to $2.41 a mile, 72 cents lower than in April 2022.
- The spot flatbed rate dipped 4 cents to $2.67 a mile, down 70 cents year over year.
Fuel surcharge amounts fell 2 cents to an average of 47 cents a mile for van freight, 52 cents for reefers and 57 cents for flatbeds, the report said. At $4.10 a gallon, the price of diesel was 11 cents lower compared to March.
DAT said the national average rates for contracted freight were lower compared to March, but the spread between contract and spot rates rose to near all-time highs: 62 cents for van freight, 60 cents reefers and 66 cents for flatbeds.
Adamo called the spread between spot and contract rates “an indicator of where we’re at in the freight cycle — the balance of bargaining power among shippers, brokers and carriers.” For the gap to close, two things need to happen.
“One, the supply of trucks on the spot market needs to diminish, which unfortunately means more carriers exiting the market,” he said. “Two, there needs to be higher demand for trucks — in other words, shippers with more loads than they planned for.”
In 2016 and 2019, it was the third week in May when the spot market entered a recovery phase after prolonged declines and stagnation, Adamo said in the release.
“Seasonality kicked in and shippers needed more trucks to move fresh produce, construction materials, imports and summer and back-to-school retail goods,” Adamo said. “If we see an uptick in demand before Memorial Day, it will be a welcome sign for owner-operators and small carriers as we head into the summer and fall.”
By Mark Montague
March 19, 2020
As I write this, spot market rates and demand are peaking, hitting numbers reminiscent of good times during 2018. Of course, it’s primarily due to Coronavirus induced buying as consumers shift from restaurants and entertainment to in home consumption of food & necessities. While current patterns look familiar, with the Southeast region leading the way, I thought I’d look a little deeper.
The Southeast region has been cited by DAT and others as the strongest current region. A glance at Hot Market Maps confirms this – here’s what’s unusual: It’s not Atlanta as the leading market, it’s Memphis. Indeed, Memphis sits as the crossroads of several regions including the South Central (Dallas, Houston), Southeast (Atlanta, Charlotte), and Midwest (Chicago, Columbus). When distribution centers in those markets run tight on supplies, they turn to Memphis. It’s also the hub of Fedex and a lot of urgent freight gets routed through Memphis.
Memphis had load-to-truck ratios hitting 8.2 on 3/10 and again on 3/16, these are almost unheard-of ratios for van freight. Meanwhile Los Angeles crested at 4.1 on 3/13 as Asian imports return to the West Coast. Atlanta did hit 5.3 on 3/13 but Dallas was only at 3.3. For context, I consider 2.5 load posts per truck to be a “balanced” van market. Long study of ratios says that’s the normal amount of ‘inflation’ in posting numbers.
Switching to regional freight matrix, which has one day rates in addition to 7-day and 15-day look-ups, I found that 7-day rates are generally higher than 15-day rates, but one day rates (Monday, 3/16) were somewhat lower, except on freight from the Southeast region to South Georgia-Florida, which rose from $2.65/mile on average to $2.71/mile. This matrix compiles all trips of at least 150 miles into its averages.
So, sooner or later most everyone will be stocked up and wanting to cut contact with fellow humans i.e. social distancing. Monday’s and Tuesday’s numbers suggest there will be ongoing craziness this week but that the peak may have already arrived, watch for ratios starting to go lower. [Update: 3/18 looks like van peaked, with numbers falling off sharply the next week.] The impact on freight rates will likely be mixed as FEMA and other emergency supplies will continue to move. Volumes are important but urgent freight also demands higher prices. Then there is the risk factor for older drivers, the majority of the workforce. If supply of truck decreases commensurate with supply of loads, then rates could stay elevated.
As far as the Coronavirus impact on the freight marketplace – I can’t remember another time in recent history like this, as I wasn’t around in 1918. I’ve just been in the industry since 1981. Back in 1973, specifically 12/19/1973, Johnny Carson made a joke during his monologue about there being a nationwide toilet paper shortage – this sparked a panic and we did have a shortage of the tissue for about a week! That’s the power of the media.
Call for Infrastructure Bill
At some point, freight volumes will drop sharply, a recession is coming unless we get a strong economic stimulus bill [Ed. – We got a Stimulus bill but 2Q numbers will still be horrendous]. This is where the trucking industry, backbone of commerce needs to have a united voice. We need an infrastructure bill to replace outdated highways and deteriorating bridges and other critical needs at ports.
Both parties have made initiatives in the past year on the topic of infrastructure. The big hold-up appears to be how to fund the bill and what ratio the Federal government is willing to pay. Back in the Eisenhower years, the interstate highway system got built with 90-10 money, i.e. the Federal government funded 90% of the cost and the states just 10%. President Trump proposed a mostly private sector $1.5 trillion dollar plan in the spring of 2019, that had the Federal share at just 20%. The Democrats countered early this year with an 80-20 plan, but stalled on how to finance the package.
Previously, discussions of a Federal tax hike on the price of motor fuels has been a non-starter. We haven’t had a tax increase since 1993, but it’s time to find a funding mechanism and get a spending bill in place for the back half of 2020. We are going to need it to pull out of the economic hit we are certain to take in the 2nd quarter. If you take down time during the current crisis, take time to write your Congress folks as I’m sure we all understand the critical importance of strong infrastructure to keep commerce flowing.
Please stay safe out there. A big “Thank You” to truckers continuing to haul goods, despite increased health risks. Elsewhere I’ve commented on the need for market discipline and each trucker needs to carefully consider the offer versus waiting for the right load. They will be out there and DAT tools can help you find them.
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Mark Montague, worked for DAT Solutions from 2009-2019, advising on the design of the RateView pricing tool. Prior to joining DAT, Mark worked in transportation and logistics, twice holding the position of General Manager of trucking operations. He earned an MBA in transportation management in 1981 from Indiana University.