Tight Capacity Has Not Reached a Tipping Point...Yet

Truckload capacity is tight, but for the moment, trucks are still available...at least for now. As produce season progresses, and a port strike looms on the West Coast, rates continue to rise. The tipping point may be closer than we realize. Keep an eye on DAT Trendlines -- or better, sign up for DAT RateView -- to stay informed of all the details in your markets and lanes.

Here are some of the big trends for the month of May:

VAN - Last week, we saw tightening van capacity in certain key markets, including Atlanta, Miami and Los Angeles, but generally speaking, in the month of May, freight returned to a fairly typical pattern for the season. If seasonal trends continue, we should see rates rise in June for both vans and reefers. Vans will probably go above $2.00 per mile, as a national average, but I don't expect to see that number reach or surpass the $2.10 mark we saw in March. As you remember, the weather was very severe throughout the first quarter, and scheduled freight moves were disrupted for both trucks and trains.

REEFER - South Florida is starting to recede in importance, and the focus for reefer freight has now moved up to Jacksonville. Other agricultural markets are coming to the fore, as well, including South Texas. Harvests are behind schedule in Watsonville and Salinas, possibly due to the drought, but other California markets are producing and rates are rising, including L.A., where outbound rates are up to $2.45 per mile.

FLATBED - Demand for flatbeds is strong throughout the country, except in North Dakota, where flatbed traffic is mostly inbound and consists largely of equipment and materials for fracking. Construction is expanding, according to the recent ISM report, and that sector contributes greatly to flatbed freight.

INTERMODAL - Many shippers have seized on rail intermodal as an opportunity to reduce costs, and this segment is up 5.8% this year to-date. The second quarter -- basically April and May -- boasts 8.5% intermodal growth. The shift of more freight from truck to rail may be one reason why capacity is still somewhat available, even in the busy spring freight season.

Categories: Rate Trend of the Week

Mark Montague

As a mathematician and statistician, Mark Montague has spent decades developing and implementing consistent, market-driven rate structures for transportation companies. Mark was instrumental in developing the dynamic, spot market rates database and analysis tools in DAT RateView (formerly Truckload Rate Index.). Prior to joining DAT in 2009, Mark applied his expertise in logistics, rates and routing as a logistics manager and analyst for carriers, 3PLs and shippers. Mark holds an MBA in Transportation Management from Indiana University’s Kelley School of Business.



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