PORTLAND, Ore.,— Spot market rates in the van and refrigerated (“reefer”) markets again soared to new all-time highs in October, according to DAT Freight & Analytics, which operates the industry’s largest online marketplace for spot truckload freight.
Flatbed rates were up from September as well, but shy of their high water mark during the capacity crunch of 2018. Spot volumes were up across all equipment types month-over-month.
The DAT Truckload Volume Index - a measure of dry van, reefer and flatbed loads moved by truckload carriers - rose 3.8 percent from last month and is 8.7 percent higher than October 2019.
“We’re expecting to see rates continue to rise through Q4 of 2020,” said Ken Adamo, Chief of Analytics at DAT. “After the historic increase of $0.95/mile since May 1 at the low point in rates during the pandemic, dry van rates have plateaued for most of October with the exception of a slight increase following end-of-month shipping volume.”
Nationally, the October load-to-truck ratio (LTR) for vans fell for the first time in six months to 4.3 from a two-year high of 5.5. A LTR of 4.3 means there were 4.3 available loads for every available truck on the DAT network. The van load-to-truck ratio was 21.8 percent lower compared to September but more than double the ratio in October 2019.
Average spot line-haul rate for vans sets another new record
The spot van rate averaged $2.40 per mile nationally in October, up 3 cents compared to September, and 60 cents higher compared to October 2019. At $2.21 per mile, the average spot line-haul rate for vans (the total rate minus fuel surcharges) set a new record for the third straight month as the highest monthly national average ever, which exceeded the national monthly average contract rate for the third month in a row.
Spot reefer volumes rose 5.1 percent month over month. The national average reefer load-to-truck ratio was 8.7 in October, more than five times higher than April’s record low of 1.7 loads per truck. The national average spot reefer rate was $2.59 per mile, up 2 cents compared to September, and 48 cents higher year-over-year.
The national flatbed load-to-truck ratio averaged 37.1 in October, lower than its two year high in September of 40.3. October flatbed volumes were up 1.6 percent compared to September but 11 percent lower than October 2019. The national average spot flatbed rate was $2.45 per mile, 4 cents more than September and 28 cents higher than October 2019.
DAT Freight Outlook
- Concentrated increases (and corresponding decreases) in truckload volumes will trigger a greater use of spot capacity than an equal volume change uniformly spread over the entire network.
- This concentration of volume changes creates imbalances that lead to increased carrier costs, which in turn help explain why non-asset-based providers are submitting rate increases in bid events roughly twice as high as asset-based carriers.
- DAT’s October FMIC Pulse Signal Report, which benchmarks freight transaction data supplied by retailers, manufacturers, and other major shippers concluded that spot market prices will continue to rise (albeit at a decreasing rate) throughout Q4.
- However, these rates are not expected to maintain these peak levels beyond the New Year, as volumes for retailers and others will start decreasing in late December and January.
- Contract rates, which represent about 80-85% of total freight hauled will, as always, lag the rise (or fall) in spot rates, and we expect them to rise through Q4 2020. The average contract rates have risen and are now almost exactly at fall 2019.
Please visit www.dat.com/MarketUpdate for regular updates on the freight market and DAT’s most recent freight forecasts.
About the DAT Truckload Volume Index
The DAT Truckload Volume Index reflects the change in the number of loads with a pickup date during that month; the actual index number is normalized each month to accommodate any new data sources without distortion. Baseline of 100 equals the number of loads moved in January 2015, as recorded in DAT RateView, a database of rates paid on an average of 3 million loads per month. DAT national average spot rates are derived from RateView and include only over-the-road lanes with lengths of haul of 250 miles or more. Spot rates represent the payments made to carriers by freight brokers, third-party logistics providers and other transportation buyers.