Van Report: Tight holiday capacity led to surges in rates

The latest data from the American Trucking Associations (ATA) For-Hire Truck Tonnage Index recorded the fourth straight month of gains following last November’s 1.3% m/m increase. Compared with November 2020, the index was up 2.5% y/y, which was the largest year-over-year gain since May of last year.

“In November, strong factory output and housing starts helped push the index higher,” according to ATA Chief Economist Bob Costello.

ATA’s For-Hire Truck Tonnage Index is dominated by contract freight as opposed to spot market freight and serves as another barometer of the U.S. economy. ATA calculates the tonnage index based on surveys from its membership and has been doing so since the 1970s.

Note: Rates reported do not include fuel surcharges.

There are still no signs port congestion on the West Coast is easing anytime soon. More than 100 vessels are waiting more than 20 days to find a berth to unload. The net result for the truckload sector has been higher freight volumes in major port markets, including the ports of Long Beach and Los Angeles where around 40% of import container volumes arrive in the U.S. DAT has recorded higher sequential spot rate increases for the last 12-months on long-haul lanes, such as Los Angeles to Chicago, where rates have increased to $3.66/mile, $1.24 higher than the previous year

Truckload capacity is undoubtedly the tightest from Los Angeles to the large e-commerce warehouse market of Stockton, where spot rates have increased by $1.10/mile in the last 12-months to an average of $5.23/mile this week.

Truckload capacity has also been steadily tightening in Chicago also. Spot rates for loads to Elizabeth, NJ, ended 2021 at an average of $3.77/mile, which is $0.35/mile higher than the monthly average for December 2020.

Load-to-Truck Ratio (LTR)

The volume of freight moving in the spot market continued at unprecedented levels last week, as load posts on the DAT Load Board network increased by 23%. DAT is currently seeing around 70% more load posts compared to the same time a year ago.

With so many carriers taking time off over the break, a higher load-to-truck ratio last week was inevitable. Last week’s dry van load-to-truck ratio spiked to its highest end-of-year level in five years moving up from 5.97 to 10.41.

Spot Rates

After a profitable year, long-haul carriers appeared to take more time off this year compared to previous years, contributing to last week’s acute capacity crunch. As a result, spot rates surged again, increasing by $0.08/mile last week making it the fourth straight week of gains – up $0.18/mile in the last month. The national average spot rate ended last the week at $2.78/mile, which is $0.41/mile higher than the same week at the start of last year.

DAT