How much lower can van rates go?

Truckload rates fell lower again last week for dry van equipment, and there's no clear sign of when they might rebound. It could be a couple more weeks before rate trends even flatten out. There's no good news for truckers this week, although some markets and lanes are less terrible than others. Keep an eye on those not-so-terrible spots, as they are likely to be the first to recover.

A few governors have announced phased plans to re-start their states' economies, starting in May. That's sure to add some new freight into the pipeline, just as fresh produce harvests gear up in the Southeast and parts of California.

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On the other hand, oil prices have plummeted to historic lows, to the point where short-term futures for West Texas Intermediate (WTI) crude oil are well below zero. If that trend holds, producers will have to pay buyers to take the oil in May. Oil drilling and production generate a lot of freight, especially for flatbed fleets, and when oil prices are negative, drilling just doesn't pencil out. All that activity will come to a halt, if it hasn't already, and the freight won't need to move. Now you have a lot of flatbedders with nothing to do, and they're hooking up van trailers. 

Sure, market conditions are lousy now, and they could even get worse in the short term — but we're hopeful that it's a temporary situation. Businesses will start to re-open eventually, and people will emerge from their homes to return to some semblance of normality. The road to recovery may be bumpy for freight transportation, but at least by then we'll be heading in the right direction. 

Meanwhile, there are exactly two "hot" markets on the map for dry van freight, unchanged from last week, and a handful of freight markets are languishing in the tepid-to-lukewarm range. The remainder of the 135 market areas are singing the blues.

Market Conditions maps, gauges, and additional charts are available in DAT Power and DAT RateView.

 

Houston has loads, but rates are trending down

When you compare them to the rest of the 135 U.S. market areas, Houston and Laredo were the best places to look for a load last week. Under "normal" circumstances, Houston's load-to-truck ratio of 3.6 would not be a standout, but with the national average hovering at or below one load per truck, carriers' prospects in Houston start to look pretty decent. Even so, rates fell last week on key lanes that originate in the Houston market, and the declining trend continues into this week.

It's worth noting that Houston was the site of a recent protest by truckers, and it's also the market that's hardest hit by any downturn in the oil industry. Since oil is experiencing a mega-downturn, that could cause a glut of capacity in the Houston area.

These trends are very volatile, and so are rates. If you're bidding on a load this week, be prepared for an unpleasant surprise — even in Houston.

Here are rolling, 7-day average van rates on these lanes from Houston:

  • to Los Angeles fell 12¢ to $1.48, and the rolling 7-day average slipped another 3¢ as of today (including data from Monday, April 20)
  • to Atlanta lost 24¢ to $1.48, then lost another 4¢ in the first business day of the new week.
  • to Chicago fell to $1.28, a 22¢ drop, followed by another 2¢ dip
  • to New Orleans dropped 32¢ (ouch) to $2.00 even, and then lost another 5¢
  • to Oklahoma City fell 16¢ to $1.73 and dropped another 5¢ in one business day
  • to Dallas dropped 15¢ 5o $1.89 -- but that may have been the bottom, because the 7-day average actually rose 4¢ on Monday. 
  • to Laredo, the other "hot" market, fell only 5¢ last week to $1.27, and then held steady on Monday. Stay tuned for further developments there.

Biggest losers face tough competition

I used to publish a weekly blog post called "The Worst Lane in America" citing a low-priced lane and suggesting triangular routes that would improve revenue for the whole trip. That idea turned into the TriHaul feature in DAT load boards and RateView. The TriHaul suggests up to five triangular routes with higher revenue than the original roundtrip. It narrows down the choices to save time on route planning. 

If I wanted to pick the worst lane in America this week, it would be a tough choice. Your mileage may vary, as the saying goes, and rates could drop even lower before the week is out. For now, here are the top three contenders for the biggest loser title:

  • Seattle to Los Angeles paid $1.02 per loaded mile last week, and the rolling 7-day average dropped to 98¢ on Monday. Not a good trend.
  • Denver to Chicago rate actually increased 2¢ last week to 97¢ per mile, and stayed there. Better trend, worse rate.
  • Lakeland, FL, to Atlanta was already a big loser for dry vans at 99¢ per mile, and then the weekly average lost another 5¢ on Monday.

Navigating these markets isn't going to be easy. Keep an eye on this blog and DAT Trendlines, as well as our special COVID-19 reports or subscribe to our free newsletters, so you'll be among the first to know which markets are gaining traction.


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Peggy Dorf

Peggy joined DAT in 2008 as a writer and market analyst. She was instrumental in developing DAT Trendlines, and she writes extensively about the impact of economic trends on companies and individuals in transportation and logistics. Peggy is a Certified Transportation Broker with decades of experience in technology marketing and an MBA from the Wharton School.



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