More Freight, Stable Rates? Capacity is Looser

Usually when more truckloads start moving, rates quickly follow the volume trend up. Rates did rise rapidly at the end of May and into the first week of June, but they weren’t so quick to follow that trend in the second week of the month.

Each week, I survey 80 high volume van lanes and about 64 reefer or flatbed lanes. What I found was that more loads were moving in the past week, but rates hadn’t budged.That is not to say everything remained unchanged, rather that some lane rates rose and others fell, so the net change in average prices was a big, fat zero. They’re still higher than May rates, but stable for the past week or ten days.

Head Haul Rates Rise, Back Haul Rates Fall

One finding was that head haul lane rates went up and back haul lanes went down. Head haul lanes, by definition, pay higher-than-average rates. (On the route between two cities or markets, one direction typically pays more, because there is more demand and/or less capacity available. That’s the head haul direction, even if it is the return trip for a truck to its home base.)

Last week, with fuel prices stable to slightly declining, carriers are seizing the opportunity to earn more on head haul freight. On the return trip, or back haul, those same carriers can afford to price their services competitively where freight is less plentiful.

Carriers Seek Freight, Brokers Find Trucks Easily

The load and truck posting statistics on DAT Load Boards provided further evidence. Truck posts are up, while load posts are barely moving from May levels. I called a few of our freight broker customers and they confirmed: it’s not as hard for them to find equipment this year. I attribute this in part, to the brokers’ extraordinary efforts to build ongoing relationships with carriers and secure reliable capacity reserves. It’s not unusual to talk to a mid-sized broker and find they do business with literally thousands of carriers in the course of a year.

Intermodal Marketers Compete with Trucks

The other part of this equation is rail intermodal, which continues to grow at a faster clip than overall freight. If a broker can’t get a truck at the right price, the rails are offering deals to intermodal marketing companies (IMC) to put freight on the rails. The broker can buy a door-door rail intermodal move from the IMC. The rails have improved their service and tracking capabilities tremendously in the last decade, which provides the shipper with service that is truck-like, especially in regards to the cubic capacity of the 53-foot container.

Local Truck Shortages Contradict Overall Trend

So while others continue to predict severe capacity shortages and driver shortages, I’m looking at the evidence from this year. And that evidence doesn’t show anything other than occasional regional shortages.

Please feel free to tell me I’m wrong. At this point, only reefer freight is exceeding last year’s prices on the spot market. Admittedly, it can still be a struggle to find trucks, especially reefers, in the top produce markets in June. Overall, however, this year looks less challenged for flatbeds, and about the same or maybe slightly looser for vans.

What are you seeing in your lanes?

If you would like to conduct a more detailed analysis of your own pricing, and compare it to prevailing rates and trends in your lanes, call 800-551-8847 or fill out this form to ask for a demo of DAT RateView