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Trucking Trends: The Roadcheck Effect

By Mark Montague

If truckload capacity felt a little tight during the first week of June, it’s not because factory output spiked or there was a sudden bumper crop of tomatoes. It may have been the Roadcheck Effect.

Roadcheck is the annual 72-hour truck and bus inspection blitz held during the first week of June. In encompasses every state and province in the United States, Canada, and Mexico.

On average, nearly 17 trucks or buses are inspected every minute during Roadcheck. Enforcement officials look at drivers, trucks, and cargo for a wide range of infractions — and frequently find them. Last year, one in four vehicles were found to have at least one out-of-service violation.

This year, Roadcheck was held June 2-4. Not coincidentally, some motor carriers took a mini-vacation.

Any time capacity leaves the market — even for a few days — it can impact rates. So what effect does Roadcheck have on spot truckload freight?

It’s hard to say precisely, but the numbers do tell a story.

During Roadcheck 2014, DAT load boards saw a 9 percent decline in truck posts and a 37 percent increase in available loads. That week followed the week of Memorial Day so a 20 percent to 25 percent increase in all load board activity should be expected (load and truck posts typically increase in the first full week following a holiday because there is one more work day — five instead of four).

Why is that important? Well, the additional pressure on capacity during Roadcheck 2014 contributed to a rate increase of more than 3 percent. National average rates jumped 7 cents a mile for dry vans, 8 cents for flatbeds, and 6 cents for reefers.

Turns out, the same pattern played out during Roadcheck 2013: loads up 30 percent, trucks up 9 percent, van rates up 8 cents per mile.

When you look at load-to-truck ratios for the weeks before, during, and after Roadcheck 2013 and 2014, it seems clear that the event can have a disruptive effect on spot market capacity.

The load-to-truck ratio is the number of load posts divided by the number of truck posts on DAT Load Boards. It’s a good metric because the balance between demand (load posts) and capacity (truck posts) is a better indicator of market pressure than either of the two components alone, and because the ratio is relatively unaffected by Memorial Day or other holidays.

A change in the load-to-truck ratio signals impending change in spot market rates about 80 percent of the time. A sustained change in spot market rates is often a precursor to changes in contract rates, so the load-to-truck ratio is a valuable leading indicator for market pressures that affect rates for carriers of any size.

Some negatives might emerge this year, however. On the capacity side, the largest carriers bought record numbers of Class-8 trucks last year, and the railroads are transporting record intermodal volume, so shippers have more options than they did in 2014. On the demand side, spot market volume and rates are soft compared to the past two months, let alone June 2014.

There are many factors that influence spot rates, capacity, and available freight. During the first week of June, it appears you can add one more: Roadcheck.

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.