Analysts Support DAT Predictions on Economy, TL Capacity

Sometimes, when you’re way out ahead of the pack, you can feel a little bit vulnerable. That’s why it is so reassuring to see external confirmation, in mid-April, of the trends we at DAT Solutions have been describing for months. We are immersed in a sea of data that represent the leading indicator — the spot market — of the transportation sector, which is itself a leading economic indicator.

As our friends at the American Trucking Associations like to say: “Good stuff. Trucks bring it.” Raw materials move on trucks before goods are manufactured, and then the goods themselves move on trucks before they can be distributed and sold. Once they are sold, we look at retail reports, consumer debt, and so forth, but those indicators all follow transportation.

So, here we are, telling you all about trends in the spot freight market, focusing almost entirely on exception freight — that’s the stuff that’s not covered by shippers’ contracts with their core carriers. Usually an abundance of exception freight indicates robust economic activity. Shippers are manufacturing more stuff, or retailers are ordering more, because they are confident that it will sell through. They didn’t schedule transportation for all that new stuff, so it finds its way to the spot market.

For most of this winter, there was an extraordinary amount of freight being offered on the spot market, but we didn’t see the underlying economic growth. That’s because the snow and ice blocked roads and disabled trucks so often during January and February, disrupting supply chains and hampering fleet productivity. The contract carriers couldn’t get those lost days back, and they had schedules to keep, so the pipeline just kept filling. Railroads were stalled too, and some freight was shifted from rail intermodal to truckload, temporarily bucking a growing trend to load as much freight as possible onto trains.

After multiple reports by my colleague Mark Montague and myself here on the DAT blog about the lingering effects of all that weather on freight transportation, plus pages of statistics on DAT Trendlines, an article appeared in this week’s Fortune Magazine online edition that supports our premise. The weather wreaked havoc on the economy, from late December through early March, but key sectors began to rebound as soon as the snow stopped falling. The article cited three proof points: (1) an unexpectedly robust retail report, coupled with (2) a burst of new car sales and (3) a drop in new unemployment claims.

On the capacity side, Noel Perry of FTR added new statistical evidence that bolsters our contention that truck supply is at a tipping point. Perry’s presentation on the subject was quoted in Commercial Carrier Journal, with a few of his key slides. If you’re involved in freight transportation, I urge you to read that analysis.

We’ll take a break from patting ourselves on the back, and look ahead to the rest of Q2. Freight availability and rates are calming down in the van segment, just as flatbeds are heating up. Temperature-controlled (also known as refrigerated, or “reefer”) freight is expected to surge from May through June or later, at the height of the fruit and vegetable harvest. We expect freight volume and rates to remain very dynamic through this quarter and the next.

If you’re in freight transportation, you’ll want the specific, lane-by-lane intelligence that you can only get in DAT RateView and the DAT Load Boards. If you’re an interested observer, keep up with broad, national trends on DAT Trendlines, which is available free of charge, online or by email.