UPDATE: Weekly reports are now available at DAT.com/MarketUpdate.
It is our mission at DAT to help customers mitigate uncertainty in their business. We have been observing and reporting on freight trends in near real-time, in order to provide valuable and actionable information to the market. This update supports that goal, helping transportation and logistics professionals to better understand this tumultuous environment.
If you have any questions about this report, please email us at [email protected]. You may also request the current rates on the top 50 lanes in the U.S. along with predictions through Ratecast, which we are providing for free during this crisis.
New coronavirus cases add uncertainty to truckload markets
There are new COVID-19 hotspots emerging this week, with new data showing that the first wave of virus outbreaks may not have ever ended – it’s just been one long wave. Data from the COVID Tracking Project shows the country has been averaging around 20,000 new cases and 1,000 deaths a day since March 1, but there’s some nuance in those numbers.
The hardest-hit states of New York and New Jersey account for 27% of cases and 37% of total deaths, but they’ve noticeably flattened their curves and are well into reopening. If their data is removed from the national total, the number of U.S. coronavirus cases has been holding steady or slightly increasing since March. The more alarming numbers are hospitalizations and deaths, which are both projected to increase in coming months according to CDC modeling forecasts.
This week we’re seeing reports of some states slowing their pace of reopening as new coronavirus cases climb in 22 states, with the Sun Belt or the southern tier of the country the most affected. It’s no coincidence that this region is where produce season is in full swing, with many new cases linked to farm workers. Since agriculture is classified as an essential service, health officials are not likely to shut down crop harvesting operations, so it’s not yet clear how this affects immediate truckload volumes.
If we follow recent Midwest meat-packing plants trends though, then labor shortages, reduced production and truck wait times are almost certain to follow. It is interesting to note that, of the top five coronavirus hot spots as measured by new coronavirus cases in the last two weeks, four of the five counties (Imperial, CA, Yuma, AZ, Yakima, WA and Durham, NC) are at the heart of major farming states, which account for 68% of total U.S. produce tonnage according to USDA data.
It’s clear we’ve got a long way to go towards economic recovery, with the truckload freight market already showing signs of being restructured. Using telematics data from their install base of two million commercial vehicles, Geotab reports that even though the daily volume of truck trips in the U.S. are down 11% this week compared to pre-shutdown baseline levels in February 2020, the number of daily fuel fill-up events are up (due to trucks running shorter trips with multiple stops at a lower mpg rate). Breaking the data down by truck type, the impact of the COVID-19 pandemic on consumer buying patterns is evident by the 60% increase in light duty vehicle trips involved primarily in final mile e-commerce deliveries.
Questions? Contact the DAT iQ data analytics team by email: [email protected].
Last Update: June 17, 2020
Van load posts gradually returning to normal
The dry van Load-To-Truck Ratio (LTR) increased by 7.46% to 2.88 last week on the back of a 6.48% week-over-week increase in spot market load posts, although this is still slightly behind load posts this time last year (down 3.87% y/y). After the massive spike in load posts in March when the pandemic shutdown took hold in the U.S., load posts have gradually been returning to normal and tracking closely with 2019 levels. Trucks searching for loads dropped 0.43% last week, as capacity tightened slightly and put upward pressure on spot rates, now up 14 cents since May 20 to $1.55/mile, excluding fuel surcharges FSC.
Reefer capacity continues to tighten
An increase of 5.3% in reefer loads posted in the spot market last week drove up the LTR by 7.67% to 4.21, which is seasonally close to this time last year. Last week there were close to 2% fewer trucks searching for loads, which is a sign reefer capacity continues to tighten as it normally does this time of year, but at a much slower pace this time around.
Port traffic slows
As states continue to re-open and employees gradually return to work, we’re continuing to see freight markets involved in domestic manufacturing start to heat up. Major port markets are a different story, though, as they continue to report lower volumes impacting both the coastal dray and truckload dry van markets.
The Port of Los Angeles, the nation’s leading port according to the Journal of Commerce, reported close to 30% fewer containers moved in May compared to the same time last year. Imports dropped 28.4%, while exports were down 37.6% as global trade continues to slow and trade relations with China continue to deteriorate.
In contrast, container volumes at the Port of Long Beach (ranked No. 3) increased by 7.6% in May, contributing to increased long-distance intermodal and truckload volumes in the Ontario, CA, freight market. On the opposite coast at the nation’s number two port, Elizabeth, NJ, container volumes dropped 7.5%. Further down the East Coast at the Ports of Virginia (ranked #8) and Savannah (ranked #4), May container volumes dropped by 23% and 10% respectively.
Markets move into peak produce shipping season
At the national level, domestic and imported truckload shipments recorded their biggest decreases in the last three weeks, dropping 22% (domestic truckloads) and 14% (imported truckloads) respectively. At the local market level, two-thirds of freight markets are now showing increased volumes as they move into peak produce season. Watermelon and berry seasons are driving up volumes in Florida and Southern Georgia markets, as the cherry season in Stockton on the West Coast draws to a close and shifts to Washington state.
According to the Northwest Cherry Growers, the Pacific Northwest cherry season expects to produce close to 20 million 20-pound boxes, which equates to around 625 truckloads per week over the 16-week season ending late August. We expect Pacific Northwest markets to provide plenty of backhaul opportunities for carriers looking for loads out of the PNW over the next 6-8 weeks.
Construction fuels flatbed demand
Spot rates for flatbeds continued to rise last week and are now up 14 cents over the last month to $1.55/mile, excluding fuel. Regional moves on lanes between Texas and Louisiana recorded the largest spike in spot rates, with loads between Dallas and New Orleans jumping 13.33% as the rebuilding efforts from damage caused by Tropical Storm Cristobal continues.
Better news on the home sales and building front, with May data showing total housing starts and building permits increased by 4.3% and 12% respectively. The freight-intensive single-family housing market is still down 18% y/y but did record a slight 0.1% uptick in May due to builders opting to remand ‘land-light’ in April, as they stopped buying land to keep balance sheets healthy. Flatbed carriers and retailers in the building, construction and landscaping sectors have every reason to be optimistic in the short-term, as the faster-than-expected turnaround in homebuyer demand resulted in the National Association of Home Builders/Wells Fargo Housing Market Index jumping 21 points to 58 – the largest ever monthly increase after plunging 42 points in April.
Van rates trending with 2009 levels
Dry van spot rates are tracking very close to 2017 and 2019, which is an encouraging sign for the market following the roller coaster ride of recent months. Demand for freight to aid in the rebuilding effort following Tropical Storm Cristobal is also evident in the dry van sector, where rates increased by 13.33% ($1.86/mile, excluding fuel) on the Dallas to New Orleans lane. We expect dry van rates to continue their upward trend right through July 4. But unlike in other years when capacity decreases as drivers take time off, we expect capacity to remain in the market this year to make up for lost revenue from Q1.
Reefer rates lose steam
National reefer rates are hovering around $1.89/mile, excl FSC this week and are only 3 cents lower than the average for the prior five years ($1.62/mile excl FSC). After plateauing over the last few weeks, it looks like the seasonal rate spike in mid-July will be much lower this season, as restaurants and food services industries struggle to reopen, while summer vacations and travel take on a very different look.
According to the USDA, domestic truckloads of fruit and vegetables dropped by 226 loads last week and by 4,130 truckloads for imported produce – a total of 4,356 fewer truckloads in the last week. Reduced volumes on imports of produce from Mexico and Canada is the major contributor to the recent reefer rate rally losing steam.
Updated forecasting models for vans
It warrants mentioning that forecasting during this volatile and uncertain period is difficult. Our team is working diligently to update and adjust the models, but the pace at which new information is being made available further complicates the issue. DAT would not typically publish these types of preliminary, internal studies, but we feel that the benefit of sharing our thinking with the industry outweighs the potential negatives. Please treat these statements and exhibits as directional, and consider them as a variable in your own analyses.
Reefer rate forecasts
- Ratecast Prediction: DAT’s core forecasting model estimate that shows flattening and rebound by mid-May.
- Pessimistic Scenario: Rates fall more sharply than seasonally expected, primarily due to drop-off in demand.
- Blended Scenario: More heavily weighted towards the downside scenario driven by continued decline in demand.
- Blended Scenario v2: More heavily weighted towards DAT Ratecast.
Frequently Asked Questions About COVID-19 and DAT Data
Many of you may also have questions specific to your business. You can submit those questions by email to [email protected] and we’ll do our best to help answer them. We’ll also share the most common questions on this page for everyone’s benefit.
The trucking freight market is a leading economic indicator because it reflects supply and demand in near real time. Trucking freight data can signal changes in consumer behavior and sentiment, like the surge in demand for household staples and nonperishable foods caused by the COVID-19 pandemic. You can also see early signs of supply chain disruptions, which will have far-reaching impacts on everyday Americans.
DAT’s database of more than $110 billion in freight transactions and over 40 years of continuous records represents unmatched breadth and depth in the trucking industry. DAT compiles actual payment records for every point-to-point lane in the U.S. and delivers current, historical, and predictive rate information and analyses. DAT’s more than 450 employees include data scientists, software engineers, and market analysts who mine our extensive database for valuable trends, insights, and intelligence.
We’re seeing a lot more volatility in the marketplace, beyond what is predictable based on historical patterns like seasonality and day of the week. For example, we would expect to see a seasonal slowdown in supply around the Chinese New Year , but the slowdown lasted longer due to the COVID-19 outbreak and factory closures in mainland China. That slowdown was followed by sharp increases in spot rates as truckers work hard to keep grocery store shelves stocked with paper goods, food, cleaning supplies, and other household essentials as state and local governments enforce social distancing measures. Along with rising spot rates, other metrics also indicate a tightening of capacity as supply chains work to keep pace with demand.
There are several smaller-scale examples of global supply chain disruptions in the 21st century, but the scale of COVID-19 is unprecedented in recent history. Both SARS in 2003 and MERS in 2012 affected manufacturing, but the impact on the American supply chain was diffuse and did not reach the economy at large in the same way we’re experiencing now. Other disruptions like hurricanes or wildfires tend to have local or regional effects on freight market indicators, not national or global impacts.
The event with the most similar impact on the US freight market in recent years was the ELD mandate. The ELD mandate had a comparable effect on loadboard activity and rates as the industry adapted to the new regulations. Bankruptcies also went up and market indicators bucked seasonal trends. There is a strong likelihood that COVID-19 will follow suit.
Unlike COVID-19, however, the ELD mandate was a singular event. The market adjusted over time and eventually returned to seasonal patterns, but the progression and future impact of this virus is still unclear. With both COVID-19 and the ELD mandate we’ve seen that uncertainty affects the freight industry in similar ways, but the current period of uncertainty is unprecedented in both length and degree. As more states issue stay-at-home orders and more businesses close, it remains to be seen how the market will be affected. Eventually infections will peak, and an adjustment period will commence. When that adjustment is complete, we expect a return to the seasonal trends. We don’t yet know how long each phase of that process will last, however.
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