PORTLAND, Ore.,— Spot market rates neared all-time highs in August, according to DAT Freight & Analytics, which operates the industry’s largest online marketplace for spot truckload freight. Spot van, refrigerated (“reefer”) and flatbed rates were higher month over month and load-to-truck ratios increased across all three equipment types.
The DAT Truckload Volume Index, a measure of dry van, reefer and flatbed loads moved by truckload carriers, rose 1.1 percent from last month and is 0.8 percent higher than August 2019.
“Volatility in shipper networks due to shifting consumer purchasing spilled over to the spot market. For instance, commercial food service is way down, but grocery purchases are up,” said Ken Adamo, Chief of Analytics at DAT. “Asset-based carriers continued to honor their committed volumes but didn’t necessarily provide additional surge capacity. As a result, the number of available loads increased and prices rose to attract additional capacity.”
Nationally, the August load-to-truck ratio for vans rose for the fourth straight month to 5.3, meaning there were 5.3 available loads for every available truck on the DAT network. The van load-to-truck ratio was 20 percent higher compared to July and more than double the ratio in August 2019 (2.3).
The spot van rate averaged $2.22 per mile nationally in August, up 19 cents compared to July and 41 cents higher compared to August 2019. At $2.02 per mile, the average spot line-haul rate for vans (the total rate minus fuel surcharges) was the highest monthly national average on record and exceeded the national monthly average contract rate for the first time since January 2018.
What’s different in 2020 though, is the rollercoaster ride spot rates have been on during the pandemic. In any normal non-pandemic year, freight rates follow a seasonally predictable downward slope until the mid-summer peak in June and July, but not 2020. By the end of the first month of lockdown in March during the panic buying phase, dry van rates had jumped 15 cents per mile above 2019 only to drop 15 cents per mile below 2019 levels by May 1st - that’s a 30 cents per mile swing in just 4 weeks. Since then rates have increased 62 cents per mile in 5 just months in what’s regarded as the longest continuous rate rally in the last 5 years.
Spot reefer volumes were down 5 percent month over month. The national average reefer load-to-truck ratio was 9.3 in August, more than five times higher than April’s record low of 1.7 loads per truck. The national average reefer spot rate was $2.44 per mile, up 14 cents compared to July, and 30 cents higher year-over-year.
The national flatbed load-to-truck ratio averaged 31.5 in August, its highest point since July 2018. August flatbed volumes were down 6.3 percent compared to July and fell 16.4 percent compared to August 2019. The national average flatbed spot rate was $2.30 per mile, 10 cents more than July and 11 cents higher than August 2019.
DAT Freight Outlook
- Weather and wildfires are likely to have an impact on supply chains in the near term, disrupting regular freight networks and creating a higher rate environment due to constraints on capacity. Hurricanes can lead to a tightening of flatbed capacity as machinery and building supplies are needed for recovery efforts.
- Tight intermodal capacity and substantial rail surcharges at West Coast ports may force smaller shippers to consider switching to long-haul truckload carriers, especially out of Los Angeles and Long Beach. This would put further strain on spot market van capacity.
- DAT iQ, the company’s analytics business, now incorporates insights on contract truckload freight from DAT’s Freight Market Intelligence Consortium (FMIC), acquired in June. FMIC’s Pulse Signal report in August concluded that while July contract freight volumes were flat, shippers increased their spot market load volumes from 12 to 15 percent on average to approximately 21 percent. This is a reflection of volatile demand for truckload capacity and that supply chains remain out of balance.
Please visit www.dat.com/blog/category/market-update 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.