Capacity constraints for vans loosened seasonally in April, but there are still many more loads than trucks available in most parts of the country. That's my main takeaway from the Dry Van Freight Barometer for April. While the current reading of 59.0 does not match the extreme levels of capacity tightness (above 65) experienced in late January and early February, the Van Barometer has been well above equilibrium (50) since June 2017, and it is expected to rise further before the end of the quarter.
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Reefer capacity tightened slightly, month over month, but carriers in both segments can command significant price increases compared to last year. Flatbeds are off the chart, and I mean that literally, as I have had to adjust the Y-axis on every flatbed graph in recent months.
This Barometers summary for April is consistent with recent months, in that Van and Reefer segments are relatively stable in the high 50s and low 60s, while the Flatbed Barometer continues to set new records every week and month.
Above is a summary of the DAT Freight Barometers for April. Values above 50 indicate that demand exceeds capacity, while values below 50 indicate that capacity exceeds demand.
I've studied the transportation sector for decades, mostly as a financial analyst, and I regularly advise transportation company executives and investors on stock purchases. Last year, I developed the DAT Freight Barometers as a predictive tool, to help explain and forecast transportation pricing trends. DAT Freight Barometers are based on metrics and statistics from DAT load boards. I routinely compare the Barometers with trends in spot market and contract truckload rates, and I have found that the Barometers are very highly correlated with rate trends.
Following the ELD rule penalty phase that took effect April 1, and coupled with an expected surge in spring seasonal freight, the Barometer level should bode well for carriers seeking higher prices in the second quarter of 2018. The Dry Van Barometer continues to predict stronger contract pricing, as well as elevated spot market rates.
The Freight Barometer is an excellent predictor of changes in spot market van rates. The graph shows the DAT Dry Van Freight Barometer (solid line) compared to the national average spot market van rate (dotted line) by month, from January 2010 through April 2018.
Categories: Trucking Industry Trends