Spot Freight Market Spotlight: Dallas

This is the second in a series of special reports on important freight hubs, to offer some fresh insight based on spot market trends. This month’s report focuses on Dallas; last month, we looked at Memphis. The information in both reports is derived from DAT Load Boards and DAT RateView.

As a freight market, Dallas is a mixed bag. Dallas is a major regional freight hub and an industrial center, so it generates outbound freight that’s heading to other cities in Texas and neighboring states. As a population center, however, Dallas is also home to more than a million consumers, so freight flows into Dallas from other industrial and distribution centers outside the region.

What does that mean for you? If you have regular, roundtrip hauls between Dallas and Oklahoma City or Houston, you can make some really good money. If you don’t have regular freight, or your customers want you to run from Dallas to Los Angeles or Atlanta, you might sometimes find yourself taking rates that don’t meet your goals. That’s because more freight is heading toward Dallas from those two cities, driving rates up on the inbound direction.

By definition, the direction with the higher rate is the head haul, and the lower-priced direction is the back haul, no matter where your truck is domiciled. So if you are based in Dallas and hauling freight to Atlanta, your return trip will be paid a higher rate. There is more demand in that direction, and that drives rates up. The higher rate makes that direction the head haul, even though you are heading back home. Strange, but true.

Here are some indicators from DAT Load Boards and DAT RateView, that may give you new insights into the Dallas freight market:

1. Outbound Load-to-Truck Ratio is Below National Average for Vans

Back haul and head haul lanes originate in Dallas and Fort Worth, resulting in a demand ratio that typically lags the national average. The Dallas metro area, including Fort Worth, is the ninth largest in the U.S. by population, making it a consuming (back haul) market. However, the sprawling metropolis also produces freight, as a location for manufacturing and distribution centers.

2. Highest-Volume Lanes Include Long-Haul Distances

Six of the top ten destinations are within 500 miles of Dallas, which is about one day’s drive for outbound trucks. Shorter hauls — in this case, on the lanes from Dallas to Houston, Austin, Lubbock and Oklahoma City — tend to pay more per mile when other factors are equal.

3. Balance of Freight Volume is Outbound on Top 10 Lanes

Outbound loads outnumber inbound loads for nine of the top ten destinations on lanes originating in Dallas. The exception is Atlanta, which dispatches more freight to Dallas than it receives in return. This is one indicator that Dallas loads include a mix of headhaul and backhaul freight.

4. Of Top 5 Outbound Lanes, 4 Are Head Hauls

The top five destinations, by load volume, are Houston, Oklahoma City, Denver, Lubbock and Los Angeles. The lanes from Dallas to four of the five destinations are head hauls, with the higher rate paid in the the outbound direction (see graph, above.) The exception is Los Angeles, which is itself a strong head haul market that delivers freight to consumers in Dallas (see graph, below.) Note that the lane to Oklahoma City is usually a head haul from Dallas, but in November, the OKC to Dallas direction offered the higher rate.

Return trips are mostly back hauls, heading into Dallas from the top five destinations. Los Angeles to Dallas is a head haul, by contrast. Other high-volume lanes to Dallas originate in Chicago and Memphis, and it can be difficult for truckers to find freight from Dallas back to those cities at a profitable rate.

If you had access to this type of information about key markets in your network, would it lead you to change anything about your operation? Your pricing? Route planning? Business development?

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Jeff Nastoff is an Industry Market Specialist at DAT Solutions, where he helps transportation and logistics professionals to improve and act on their grasp of dynamic market conditions. Jeff previously worked for Merrill Lynch and Cost Advisors, Inc. He holds an MBA from University of Oregon.