With TL spot rates still up year-over-year and truck capacity remaining tight, industry observers expect ongoing freight market trends to continue favoring truckers larger and small.
“The question for many shippers is how long will the tough times last? When we look at freight demand, which has been strengthening for nearly a year now, our forecast shows robust demand for most of 2018,” noted Jonathan Starks, COO with FTR Transportation Intelligence. “If there will be improvements for shippers, it won’t be because of a softening of freight. The Truckstop.com market demand index, at roughly twice the level that it was at this time last year, highlights the tight capacity situation within the spot market. It began rising again in February after softening following the strong holiday season. For shippers who haven’t locked in capacity, this year’s spring shipping season will be a tough one.”
On top of that, national average TL spot rates for dry van and refrigerated or “reefer” service, though down slightly week-over-week, remain well ahead of last year’s levels, according to data tracked by load board operator DAT Solutions.
DAT said dry van spot rates dipped two cents to $2.15 per mile for the week ending February 17, while reefer spot rates dropped five cents to $2.45 per mile compared to the previous week. It was the sixth week in a row that the dry van rate has declined, the firm said, but that’s a “normal trend” for this time of year and the average is still higher than at any point in 2017.
Freight volumes are also higher than they were a month ago, DAT added, with the number of available loads on the spot market up 1.5% and while truck availability increased just 1.1%, shifting load-to-truck ratios slightly:
- Dry van: 7.2 available loads per truck, down 2%
- Flatbed: 64.2 loads per truck, up 4%
- Reefers: 9.6 loads per truck, down 6%
In the dry van market, load posts were unchanged and truck posts rose 2%, DAT noted, and with a few exceptions, prices were stable out of the major markets for dry van freight:
- Chicago: $2.68 per mile, down 3 cents
- Houston: $1.97 per mile, unchanged
- Dallas: $1.92 per mile, up a penny
- Memphis: $2.50 per mile, up a penny
- Atlanta, $2.32 per mile, unchanged
- Los Angeles, $2.17 per mile, down 4 cents
Reefer load posts fell 5% and truck posts edged up 1% for the week ending February 17, with prices still “unusually high year-over-year,” DAT said, although at $2.45 per mile the average is 25 cents less than a month ago.
The firm noted that the average flatbed spot rate hit $2.30 per mile, rising for the third straight week, with load posts increasing 1% and truck posts falling 3%. Altogether, flatbed volumes have held steady since an uptick at the end of January, DAT noted
None of that generates a good outlook for shippers, noted Avery Vise, FTR’s vice president of trucking.
The firm said its Shippers Conditions Index (SCI) in December 2017 remained basically unchanged from November at a reading of negative 8.8 as motor carrier capacity remained extremely tight with rate acceleration expected through the second quarter of this year, keeping the index in decidedly negative territory through early 2018.
“We are seeing record truck and trailer orders, which indicate buying above replacement demand, and much of that will hit the market in the second half” of this year, Vise noted. “However, that narrative is somewhat disrupted by ELD [electronic logging device] implementation and the driver shortage. People naturally think of the driver shortage in terms of the supply of drivers, however, changes in carrier productivity are just as important.”
As a result FTR anticipates that shippers and motor carriers will implement a host of productivity enhancements as 2018 progresses – measures such as drop-and-hook, better scheduling for pickups and deliveries, faster dock turnarounds, better coordination among shippers through intermediaries, and so on.
“Higher rates motivate shippers to be much more flexible on steps that increase carrier productivity,” Vise added.