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Trucking Trends: The Ripple Effect
Hanjin bankruptcy, harvests may boost truckload rates

By Mark Montague, DAT Solutions

Demand for truckload capacity has been steady but unspectacular of late, and through mid-September, rates for spot van, refrigerated, and flatbed freight varied little from averages in June, July, and August. Shippers have benefited from a sense of "normalcy" on the spot TL freight market, which thus far has been devoid of big splashes and ripple effects that typically drive contract rates higher.

I'd advise shippers to not get complacent about transportation costs for the longer term, however. Some recent events signal that rate increases could be only weeks away.

Lessons from Hanjin

Hanjin Shipping Co.'s bankruptcy stranded 89 ships worldwide containing some $14 billion worth of cargo. It also tied up nearly 500,000 Hanjin containers in ports and truck yards, occupying trailers that can't be used for other cargo—including inbound retail goods for the holidays.

How this capacity will shake itself out is anyone's guess. But expect the availability of trailer chassis to become tighter as the holiday season nears and as more Hanjin ships arrive in ports and unload containers.

Congestion and missed schedules should keep spot truckload capacity in demand—and rates high well into November, when the holiday freight season would ordinarily start to wind down.

Huge Harvests Expected for Apples,
Onions, Potatoes

I track produce trends, since these have some variability from year to year, and the unpredictable amount of harvested goods can have a big influence on spot market trends.

In California, several years of drought has reduced

yields from the Central Valley. But other parts of the U.S. have been far more fortunate.

This year's apple crop escaped late frosts and is now projected to achieve record harvests. The Michigan Apple Committee is forecasting a harvest of 31 million bushels, 7 million bushels more than last year and the biggest ever for the state, which averages about 22.8 million bushels annually. Colorado, Utah, and Idaho all appear to be on track for higher than normal onion and potato yields. The Pacific Northwest also has a strong harvest of tree fruit this year.

As a result, refrigerated trailer capacity may be at a premium, which could drive spot reefer rates higher. With fewer reefers competing for van freight this year, we can anticipate higher demand and rates for van trailers.

After months of smooth waters, the Hanjin bankruptcy and bumper crops in the Midwest and West are about to send waves through the spot truckload market. I know I'll be keeping a close watch on how this plays out, and I suggest you do the same.

Mark Montague is industry rate analyst for DAT Solutions, which operates the DAT® network of load boards and RateView rate-analysis tool. He has applied his expertise to logistics, rates, and routing for more than 30 years. Mark is based in Portland, Ore. For information, visit www.dat.com.