We typically expect rates to surge at this time of year -- for reefers, of course, but also for vans and flatbeds. This year, reefer prices rose at the end of April, which was later than expected, but van and flatbed rates hit a plateau that lasted through mid-May.
There are a few big factors at play here.
More Drivers - Unemployment is still high, but the trucking industry added 11,700 jobs in April, after losing 6,300 in March. (This information originated with the U.S. Bureau of Labor Statistics, and was summarized in The Truckers Report.) That brings the total number of new trucking jobs to 45,300 added in the past 12 months. Compared with the lackluster employment reports for the same period, our industry is booming, and is responsible for 7% of all the hiring nationwide. With more drivers, capacity is looser, putting downward pressure on rates.
Cheaper Fuel - Everyone is happy when fuel prices decline -- okay, maybe the oil companies and their shareholders aren't thrilled -- but fuel surcharges decline, too. The carrier gets a lower total rate per mile because the line haul portion of the rate does not tend to increase. Granted, the carrier's costs are declining too, and if the fuel price declines fast, the carrier benefits from buying fuel this week with the higher surcharge dollars he received for a haul he completed 30 days ago. Fuel prices are rising again now, but they are still lower than they were last year. My optimistic nature says that lower fuel costs help the economy, leading to an eventual increase in freight volume -- and higher rates.
Late Harvests - Crops have been coming in a couple of weeks late, particularly in Southern California, and that has postponed the normal pattern of reefer rate increases that drive van rates up. Trucks are getting tight (finally!) in agricultural regions in the South and at Texas border crossings,with an average rate of $2.18 outbound from major reefer markets nationwide. Some produce quantities are reduced, however -- Florida citrus crops are expected to be off by about 10% this year, for example, due to a bacterial disease that kills trees and threatens the state's $9 billion industry. Overall, reefer rates don't appear to be heading up to last year's seasonal heights, but may resemble 2011 patterns instead.
I'm looking at the 30,000-foot view, and your results are almost certain to vary -- unless you work at a large, national transportation company. If your business is mostly local or regional, and you're moving freight in a high-demand market or with specialty equipment, these broad, national trends probably will not resonate. They can still be helpful, however, because big trends do have an impact on pricing in local markets.
For current trends and pricing benchmarks, check out DAT RateView, where you can compare your prices against the rates that are being paid today by brokers and shippers in your lanes. If you'd like to speak to a representative or see a demo, please call 800-551-8847 or fill out this form.
I'd appreciate hearing more about your own observations on current trends in the marketplace. Please comment below, and join the conversation. Thanks!
I DONT UNDERSTAND HOW SOMEONE CAN QUOTE SAY REFER RATES HAVE GONE UP. THAT IS TOTALY OBSURD. WE CANT EVEN USE OUR TARIFF ANY LONGER EVERY DAY IS SPOT RATE BECAUSE OF THE LOONEYS OUT THERE GIVING CHEEP RATES
Just out of curiousity, why are the dumb a** drivers moving the cheap freight? If these rookie drivers and large trucking companies that accept this crap would stop, then the shipper would have no choice but to increase the rate.
Its always been a matter of supply vs demand. Right now we are supposed to be in a driver shortage, however we are also in a freight shortage. If things improved quickly we would see a huge jump in rates that would be stable for a foreseeable future but right now it seems companies are adding trucks and drivers at the same rate freight is increasing. If the large companies would do a hiring freeze, it would have a huge effect on the industry but they won't as we are direct competition for them when it comes to our drivers, we keep them, they can't and blame us small carriers for that. If things don't improve I will eventually fold my trucking company and just keep my brokerage open. There is not enough money in basic rates to offset the operations of day to day business, things go okay until there is a major breakdown or claim. I personally am getting tired of being told what I can do a job for instead of me quoting a good number with a reasonable profit in it...
[A closing sentence was deleted by the blog's editor, due to highly charged language.]
Rates are not rising because the 3PL's and Brokers have bid freight packages far too low for the markets. Consequently they are offering lower rates to the carrier in order to raise their own margins. 3PL's and Brokers are the bane of this industry!
I have sat at home now 2 weeks because of this & wished everyone else would too, it's like winter rates in spring, remember this is the time of year that we wait for every year to make up for the losing in the winter & as long as the rest of you haul at these rates the brokers are just going to have more money in there pockets.
I don't see enough owner operators on up the food chain to large trucking banding together long enough to make a material difference in rates ever increasing. The biggest variable is competition. The only companies that are knocking it down in trucking are those in the top 10% within the industry. The other 90% is just trying to hold on or only making average profits. You'll never get enough people to sacrifice long enough for the greater good of the industry. Too many families to feed. Remember, the first one blinks, loses.
Sometimes it's a choice between cheap freight or no freight. We should all try harder to avoid markets where it's difficult to find loads.
Re: "Sometimes it's a choice between cheap freight or no freight. We should all try harder to avoid markets where it's difficult to find loads."
Sometimes you just have to go to a dead-end market, because the customer needs you to make that trip. So we added a new feature to DAT RateView to make it easier for you to make more money on your return trip. The feature is called "Trihaul," and it calculates five alternative routes that pay better than a straight backhaul from the same origin to the same destination.
If, for example, you need to haul freight from Chicago to Dallas, you know that the return trip typically does not pay well. RateView suggests that you take a load from Dallas to another city on the way to Chicago -- say, Columbus, Cincinnati or Knoxville. Then you pick up a second load, and add as much as $1,000 to your revenue for the return trip.
You can evaluate the options to see which one fits your schedule and your driver's HOS limits, but this is a winning strategy, and RateView makes it easy.
Why would the drivers or companies stop? In this economy if you can take the cheap freight and stay in business, as opposed to parking your truck for a week and go out of business, the reasoning seems pretty clear. If/when the freight increases the rates will also. Supply and demand will increase profits, not getting everyone to hold out for an extra .15/mi. There will always be someone else out there that will do it for .01/mi less. The ones taking the cheap freight either know how to operate cheaper or will be out of business soon enough. If the latter is the case, it only reduces capacity and increases rates.
RUN CHEAP, GO BROKE!
I'm sorry if this sounds like ranting but,the broker's are taking more money than they should leaving the us owner operators in the cold with all the expense !!!!! I know for a fact that some of the brokers we pull for are most certainly taking more than their share!!! Say that they are looking out for their shippers!!! WHO'S LOOKING OUT FOR US AND THE TRUCKING INDUSTRY!!!!!
Thanks Dale Gentry
There is NO DRIVER SHORTAGE. This is propaganda put out there by the large carriers who have empty trucks sitting. If they had all the drivers to fill the trucks, they'd be sitting too. If there was REALLY a driver shortage, freight rates would be at a premium.
I belive the bigest problems with the rates arent really the big companies for the most part but I belive its the brokers out here like last week when a broker makes 75 cents a mile on a load and has been trying to move that same freight for 1.30 when the customer is paying 2.35 a mile then after 2 days they get it moved for 1.70 a mile as a LTL when the customer was paying a full load rate
You can't blame the brokers only, there are good brokers out there just like there are bad ones. The market is not easy and at this point it feels that everyone is competing for business, carriers, brokers and so on. You think that a broker will take more that his or her share but reality is they are also competing with other brokers and even big asset-based carriers. The only way I see your business will survive is to get in the game and move your trucks at what you think is a good load for you. Be proactive and keep searching for good opportunities.