Q3 Freight Boom Lifts Rates

Freight is moving like gangbusters on the spot market, and rates are trending up again. This is unusual for the third quarter.

It’s a busy time for trucking in general, and the American Trucking Associations (ATA) just reported record levels of for-hire freight tonnage in August, with a 6.9% increase compared to August 2012. ATA cautioned that the number of truckloads has not increased that much, but freight is heavier, on average, because the cargo is weighted (no pun intended) toward manufacturing and construction materials.

Spot Market Booms – Here at DAT, we saw an atypical stability in freight volume in July and August. Usually, freight availability and rates peak in June and then slump through most of the third quarter, with an occasional mini-spike in early Q4. This year, freight availability is remaining at or near June levels right through August and well into September, and rates are elevated as well.

Busy Ports and Hubs – A lot of the pressure on rates is coming from abundant freight at major sea ports and distribution hubs. We see imported goods arriving from Asia through L.A., Long Beach and, to a lesser extent, Seattle. Load posts are up more than 50% in L.A. compared to last year at this time. European imports are driving rates up in Charlotte, NC, and some ships traverse the Panama Canal or the Gulf of Mexico to reach Houston. Freight is hauled to distribution centers, either by truck or rail intermodal, and re-positioned in Chicago, Columbus, Memphis and Atlanta, for freight moves into large population centers on the East Coast.

Intense Regional Demand – Freight is plentiful and trucks are getting tight in certain regions and markets. I’m sharing the DAT Hot Market Maps that depict the load-to-truck ratios on the DAT Load Board in each of 153 key market areas or pricing “pods” throughout North America, In the darkest-colored areas, load posts exceed truck posts by a factor of more than 5.7-to-1 for vans (orange) and reefers (blue) and 10.5-to-1 for flatbeds (green.) I’ve circled the regions where activity is most intense for each equipment type.

Dynamic Pricing – Typically, when load-to-truck ratios rise, that’s the earliest indicator that there is pressure in the marketplace, and you can expect spot market rates to increase, too. Spot market rates are very dynamic, because the freight broker or 3PL is negotiating these rates now for a freight movement that will take place within 24-48 hours. The freight has to move, and if there is a shortage of trucks in that location, the broker will likely pay more than he did yesterday for the same cargo in the same lane. When you see an area turn dark on your Hot Market Map (available in DAT Load Boards and DAT RateView) that is your signal that rates may be rising soon.

Go West, Young Van – The Pacific Northwest is hot for van traffic. Apple and potato harvests are abundant, and vented vans can substitute for reefers in many cases.

Apples Roll Out – Both the Pacific Northwest and the Upper Midwest are turning out bumper crops of apples and other late harvests are equally abundant.

Flatbeds Everywhere – Just when you thought flatbed season was ending, freight volume and rates bounced back. The Southeast, Northeast and Mountain regions need flatbeds to haul equipment and materials for construction and drilling.