By Mark Montague, DAT Solutions
The largest truckload fleets have been commanding a bigger share of the freight marketplace in recent months, and for an unexpected reason: an improved driver turnover rate. During the first quarter, annualized turnover at truckload fleets with more than $30 million in revenue dropped 12 points to 84 percent, its lowest level in four years, according to the American Trucking Associations.
Another factor is that large fleets are replacing old trucks and adding new ones as driver incentives. Class-8 truck orders rose 42 percent to 380,200 net orders in 2014 and the number of tractors on U.S. highways is expected to rise 6 percent this year to 1.43 million, reports ACT Research.
The combination of better driver retention and fleets with newer, more fuel-efficient trucks is a boon to large truckload carriers. According to second-quarter financial reports, this group has generally done a fine job controlling operating costs and improving equipment utilization. Deadhead miles are down.
Where does this leave small truckload carriers? If you can put trucks and drivers in the right place at the right time, there is money to be made — even in a soft market.
For instance, reefer load availability increased 5.5 percent in June but capacity also added 6.3 percent compared to May. The overall load-to-truck ratio was stable (down 0.8 percent) at 5.9 loads per truck, month-over-month, but compared to the unusually high demand of June 2014, the ratio fell 49 percent. Load-to-truck ratios are important. They represent the number of loads posted for every truck posted on DAT load boards and they’re a real-time indicator of the balance between spot market demand and capacity. Changes in the ratio often signal impending changes in rates.
When you map load-to-truck ratios on a state-by-state level — see the June 2015 map of reefer load-to-truck ratios from dat.com/trendlines, for example — wherever the reefer load-to-truck ratio appears high (darker blue areas) signals an imbalance that favors the carrier.
You can drill down more closely. For example, the Cape Girardeau, Mo., market ships melons that came in season in late July. In a few weeks, markets farther north will come into play, boosting rates during the fall harvest season.
A strong load-to-truck ratio doesn’t necessarily mean that rates are high in the direction you want to go. But if you have a truck in the region, or you have an inbound load, it will tell you that those are some good places to start looking for freight.
Santa is Coming
It’s been a relatively slow first half of the year, marked by bad weather, labor issues at the West Coast ports, and a stronger U.S. dollar, among other things. This slump is a bummer but the data tells us that much of the slowdown is due to seasonal freight cycles. The rest is adjustment from the slowdown in oil and gas production.
Meanwhile, consumer confidence is up, and the non-manufacturing sector shows rising orders that should boost the economy and van freight availability, as retailers build inventory for the fall retail season.
Mark Montague is the senior industry 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.