What's the "New Normal" for Truckload Freight?

Many industry experts predicted strong freight volumes on the heels of last winter’s huge backlog of freight. From December through March, supply chains broke down and delays became the norm in freight transportation, as one of the worst winters in recent memory snarled traffic from Denver to Atlanta to Boston, and back again to Minneapolis.

New conditions began to emerge in April, even though records remained high. In fact, soft pockets developed from Seattle to Denver to Fort Worth, in Miami and in New England, spreading to Buffalo, Detroit and Chicago.

What can we expect, going forward? Recent freight trends on DAT Load Boards and in DAT RateView reveal unique trends for each of the three major modes of trucking freight:

Reefer freight has followed a fairly typical trajectory in April. Spot market rates are elevated for temperature-controlled freight, but they’re not setting any records just yet.Reefer rates averaged $2.28 per mile last week, including the fuel surcharge. That is 23¢ higher than last April’s rates, but it doesn’t quite reach last year’s record of $2.32, set in June. Outbound freight is strongest in produce regions, in the Rio Grande Valley in south Texas, in southern Florida, and along the California coast. Nogales, AZ is very active as a crossing point for Mexican produce. Elsewhere, Atlanta, Dallas and St. Louis are humming as distribution points for refrigerated goods.

Flatbed freight has been ‘red hot’, despite housing stumbling in recent months. Credit goes to ongoing energy development and certain segments of construction. Hot markets have included Atlanta, Houston, Memphis, Phoenix, Roanoke, and even Medford, Oregon and Billings, Montana. Markets with steel production plants are strong on demand.

Van freight, however, has followed a different pattern. During the winter months, van rates rose to new highs on the spot market, hitting a nationwide average of $2.10 per mile at one point. Then came April, and van rates and volumes have been drifting lower all month. Demand for vans is slack in Denver, Seattle, and Stockton in the West, which is not too surprising.

Typically at this time of year, we see a shift in pressure from the Midwest down toward the Southeast, as produce harvests get underway and reefers are too busy to be deployed as backup van capacity. This week, I was surprised to see a load-to-truck ratio of only 2.1 in Atlanta. Similarly calm conditions prevailed in Charlotte and Nashville, as well.

The Midwest was even slower for vans this week. The load-to-truck ratio in Chicago was down to 0.3 on Monday, as available trucks outnumber loads leaving the Windy City. Columbus, Detroit, and Minneapolis were similarly below seasonal norms. Only Green Bay showed a pocket of strength. The Northeast tells the same story, with loose van capacity on the spot market in Allentown, Boston, Buffalo, Elizabeth, NJ, Philadelphia, and Winchester, VA.

Perhaps this is a temporary lull. Things have yet to really warm up in parts of the Midwest, and tornadoes are wreaking havoc in the Southeast. Or maybe last winter’s home heating bills and rising gas prices have deprived consumers of disposable income that would otherwise translate into spending.

If this keeps up, van rates will continue to move down, although it is unlikely that they will return to last year’s lows. That begs the main question: What is the “new normal” in this confused pricing environment?

Each week I look in DAT RateView at rates in thousands of high-volume lanes for van, reefer and flatbed freight. Usually, many lane rates remain the same from one week to the next, but a sizable number of rates are sharply up and some are sharply down. In recent weeks, those rising and falling rate trends have been pretty much in balance. This suggests that the market is trying to find the new normal. I think it will take a few more weeks of price variability before the answer becomes apparent.