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Trucking Trends: A 5,000-Foot View of the Freight Market

By Mark Montague, DAT Solutions

If you look just at national average rates and volumes on the spot truckload market, it's easy to lose sight of the details, the local influences that really set the trends. But when you focus only on lane-by-lane reports, it's easy to miss the bigger picture.

So lately I've been looking at outbound activity by region, trying to understand what's behind some notable strong volumes this fall.

Measured at the national level for trips over 250 miles, spot market van rates are up 2 cents per mile in November, compared to the October average. Rates are up 17 cents per mile since the low point in April, including a 6-cent increase in the fuel surcharge.

I analyzed outbound rate activity in 15 regions, in fact, comparing average spot truckload rates for the first seven days of November to rates for the entire third quarter. All told, comparing the outbound rates from 15 regions to each of the same 15 regions as destinations gives you 225 (15 x 15) origin-destination pairs.

In the first week of November, 64 of those region-to-region pairs had a rate increase of at least 6 cents per mile. Why?

First, there's more freight to haul. Spot van freight volume usually peaks in June and gradually declines during the rest of the year. We started November with no seasonal decline in activity. Instead, the freight economy appears to be heating up, at least on the spot market.

Second, there's higher than normal demand to move that freight from west to east.

In my 15-region analysis, the biggest rate increases were on lanes that originated in the West, heading to destinations along the East Coast. Rates were up by 6 cents a mile or more on nearly every west-to-east lane pair.

Here are the four region-to-region pairs with the biggest rate increases, comparing last week to the third-quarter averages:

  • California to New England: Up 18 cents
    per mile
  • Upper Mountain States to Florida and Southern Georgia: Up 17 cents per mile

  • Pacific Northwest to Florida and Southern Georgia: Up 16 cents per mile
  • Lower Mountain States to Lower Atlantic States: Up 16 cents per mile

In some regions, including the Great Lakes and Upper Midwest, rates were actually down 6 cents per mile or more in the first week of November. But surging activity out of California, the Pacific Northwest, and Mountain regions has elevated the national average.

Again, you have to ask why. Here are a few factors that are contributing to higher rates:

  • Strong produce harvests and demand for holiday inventory. The national average refrigerated truckload rate rose to $1.97 a mile during the first week of November, the highest since early July.
  • The Hanjin bankruptcy, resulting in supply chain disruption and increased amounts of inventory transfers.
  • Weather events, including flooding in Louisiana and the Carolinas, which generate demand for emergency relief, followed by construction supplies and equipment.

If you're out West, demand for truckload capacity is a heavy counterweight to the weaker markets elsewhere. While the geographic trends may shift in the next four to six weeks, it's reasonable to expect a continuation of the atypically high volume and rates on the spot freight market through the end of the year.

At least, that's the view from here.

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.