We write about the load-to-truck ratio a lot on this blog, but we don't always explain it. Sometimes a customer will ask about it, but there could be a lot of people who want to know, but they just don't ask. So I'm gonna give this a whirl. If you still have some questions, please post them in the comments, and I'll answer those, too.
What is the load-to-truck ratio?
We divide the number of load posts by the number of truck posts on DAT load boards, and that's the load-to-truck ratio. It's pretty simple as a math problem -- especially with a calculator. When there are a lot of load posts, or there are very few truck posts -- or both -- the load-to-truck ratio goes up. If there aren't many loads, or there are a lot of trucks available, the ratio goes down.
What does it mean?
When there are a lot of loads and not a lot of trucks in a market -- let's say Chicago -- the load-to-truck ratio rises. Yesterday, there were 3,847 outbound van loads posted in Chicago, and 1,725 truck posts. 3,847 ÷ 1,725 = 2.2 loads per truck. The national average was 3.2 last week, so 2.2 isn't very good. According to the load-to-truck ratio, you would not expect rates to rise in Chicago, generally. But some destinations are more desirable than others. The trucks want to go in a particular direction. At this time of year, more trucks want to go from Chicago to Dallas than to Atlanta, for example, so carriers who are willing to go to Atlanta can ask for more money. And they'll probably get it, because the brokers want to move those loads. In fact, the rates did go up 7¢ per mile on the lane from Chicago to Atlanta last week, to $1.88. But you can get paid even more if you're close enough to get a load from Indianapolis to Atlanta, where the load-to-truck ratio is 4.4. That rate rose 18¢ last week, to $2.01 per mile.
Brokers may re-post loads if they're not covered right away, and many truckers prefer not to post their trucks at all. So the load-to-truck ratio indicates pressure -- more like a barometer than a thermometer -- and it's relative. Is there more pressure in one city than another? Is there more pressure today than there was last week? The trend is more important than the actual number. When the load-to-truck ratio goes up, rates usually follow.
Rates on DAT load boards are based on actual rate agreements between freight brokers and carriers. You'll either see average rates between two areas for the past 90 days -- the most common view in DAT load boards used by small carriers -- or a finer-grained view that gives the 15-day or 7-day average rate for a point-to-point lane, based on 3-digit zip codes. DAT tracks more than 65,000 lanes, and you'll see lane-by-lane averages within a range of rates that were paid.
As you noted, the rate is usually higher in one direction. That's a response to demand. Spot market rates are often one-time agreements. If you are providing steady freight to your carriers, or you load them in both directions, they may be happy to get a little less in the busy season, knowing you'll provide them with regular hauls during the slow times.
Categories: Best Practices and Benchmarks