Rate Trend of the Week – Go South, Young Van

Rates ticked upward on the spot market last week, with line haul up a penny for vans, reefers and flatbeds. That change was balanced by a decline in the fuel surcharge, but the overall trend is heading up, boosted by vibrant demand that continues to build in all three segments. June is typically the peak season for spot market volume and rates, and that is the pattern that seems to be taking shape now.

Rates continue to trend up in June for all three equipment types, Rates shown above omit the fuel surcharge.

If current trends continue, we can expect rates to climb in most markets until at least the end of this month. Shippers typically make an extra effort to close the second quarter on a high note. If the typical pattern holds, we will see a lull in July, followed by a gradual build-up in van traffic with back-to-school merchandise in August and September.

Setting the crystal ball aside, let’s return to major trends of the past week:

VAN – South By Southeast

Van rates shot up in the Southeast, after a slight lull in the previous week. Charlotte saw a 14-cent (7.8%) increase that lifted rates to $2.01 per mile, including fuel. Memphis rates rose 4.0% to $2.16 and Atlanta hit an average of $2.00, thanks to a one-week increase of $0.06 (3.2%.)

Vans leaving Atlanta have a lot of choices these days. Traffic to Florida continues to run strong, as does freight to the Midwest. Last week, a sweetener was applied to rates from Atlanta to the Northeast, as the lane to Philadelphia jumped $0.34 to $2.84 per mile including fuel. The return rate, which rose by 4 cents, is only $1.17, but the round trip now yields a respectable $2.00 per mile.

REEFER – Phoenix Rises, as Central California Blossoms

The “Most Improved” trophy for reefer rates went to Phoenix, with a 9.3% increase, to an average of $2.68 per mile including fuel. The biggest gain was in the lane from Phoenix to Dallas, up $0.30 to $2.52, and the week’s highest rate was from Phoenix to Salt Lake City, up $0.15 to $3.39 per mile. Central California markets are also trending up, as harvests are hauled off to consumer centers. Outbound rates were up 6.2% from Fresno, to $2.74, and Sacramento rates rose 2.8% to $2.63. McAllen, TX is up 0.9% on increased volume, likely from imported produce crossing the Mexican border.

It’s interesting to note that new highway and bridge construction in Mexico is assisting a market transition. Truck traffic that would have gone primarily to the border crossing at Nogales NM is now beginning to move through Texas to East Coast population centers. This is likely to have a substantial effect on future fleet deployments, especially for reefers. I’ll write more about this phenomenon soon.

Rates are cooling off in Florida. A 4.3% decline in outbound rates from Lakeland led to an average of $1.93, and the Miami market lost 2.7% but still paid an average of $2.76. The Los Angeles market also lost ground, with a 4.7% dip in reefer rates out of Santa Ana, to $2.45, on declining freight volume.

FLATBED – Memphis Blues? Not Exactly.

Memphis rates may have peaked for the season, but it still leads major markets with an average rate of $2.89 per mile, all i n. Northeast regional traffic is trending up, led by Baltimore, up 3.7%. Baltimore to Springfield MA was up a full $0.61 (19%) last week, to $3.86 per mile. Another standout was the lane from Harrisburg PA to Buffalo NY, up $0.82 (34%) to $3.21.

On the down side, flatbed rates from Tampa dropped 2.8% to $1.92, the lowest of any major flatbed market. The lane from Raleigh NC to Greenville SC dropped the most for a single rate, going from $2.84 to $2.43 per mile. The lowest lane rate of recent weeks was the average on the route Baltimore to Charlotte, at $1.49 — so if you’re headed into Baltimore, be sure your outbound route is not southbound.