Spot Truckload Rates Improve, Freight Availability Matches Year Earlier
Average spot truckload dry van rates increased in July from June for the first time in six years, while July spot market freight availability caught up with 2015 levels for the first time this year.
Evan Lockridge・Former Business Contributing Editor
August 15, 2016
July spot market freight availability caught up with 2015 levels for the first time this year, due to an increase in volume for dry and refrigerated van trailers, and despite a year-over-year flatbed freight volume decline.Graphic: DAT
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July spot market freight availability caught up with 2015 levels for the first time this year, due to an increase in volume for dry and refrigerated van trailers, and despite a year-over-year flatbed freight volume decline. Graphic: DAT
Average spot truckload dry van rates increased in July from June for the first time in six years, while July spot market freight availability caught up with 2015 levels for the first time this year, according to latest reading from the DAT North American Freight Index.
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Despite a 1.4% gain, or 2 cents per mile, for dry vans last month, reefer rates declined 1.7%, or 3 cents. That indicates relative strength, however, compared to the 5.2% average decline in July of the previous six years, according to the freight-matching service provider. Flatbed rates fell 2.3%, or 4 cents, which is typical for the season.
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Month-over-month, total spot market freight volume dropped 17% from the June peak, which is typical for the time of the year, while van and reefer freight each lost 14% and flatbeds slid 23%.
Even with this July drop, DAT said spot market freight availability matched the level from a year earlier, due to an increase in volume for dry and refrigerated van trailers that offset a year-over-year flatbed freight volume decline.
Also unusual was a rate increase for van trailers in July compared to June. Van rates typically peak in June and decline in July, according to DAT.
The increased spot market volume can be attributed to recent cutbacks by the large fleets that typically work with shippers on a contractual basis, according to Mark Montague, industry pricing analyst at DAT.
"As trucks are withdrawn from the marketplace, shippers are beginning to assign a larger portion of freight to third party logistics providers and freight brokers," he said. "If these trends continue, spot market volume could exceed 2015 levels for the rest of the quarter, driving rates up," he said.
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As this marketplace transition progresses, the impact varies by equipment type. Compared to July 2015, van freight volume increased 17% and reefers gained 5.2%. Flatbed volume declined 18%, however, due partly to prolonged cutbacks in the energy, manufacturing and construction sectors that generate flatbed freight, said DAT.
Despite these higher volumes, truckload rates fell for all spot market equipment year-over-year, a consistent trend for 14 months. The declines in July were less steep compared to the first half of 2016, especially for vans and reefers.
Compared to July 2015, van rates dropped 6.5%, reefers lost 6%, and flatbed rates fell 7.1%. The average fuel surcharge declined 23%, meanwhile, driving down the total revenue per mile by 9.4% for vans and flatbeds, and 9% for reefers. The surcharge, which varies with the price of diesel fuel, is included in the total rate paid to carriers.
In an interview with Heavy Duty Trucking magazine for the July issue, Montague said external pressures that pushed rates down appear to be easing and rates are finally starting to improve — although they still have a way to go before returning to last year’s levels or the record-setting highs of 2014.
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