By Mark Montague
As truckload freight moves into a more typical summer pattern, many lanes that paid headhaul rates just a month or two ago have turned into backhauls, where a backhaul is defined as the lower rate in a pair of moves (A to B and B to A).
Florida is a classic example.
Take a look at a 13-month history comparing average spot-market truckload reefer rates between Atlanta and Miami.
For 11 months of the year, Miami-to-Atlanta is the low-paying half of an imbalanced lane.
In May, the trend flips. The Miami-outbound spot rate jumps as Florida’s produce season sends reefer demand soaring (the average rate jumped nearly 40 cents a mile in May alone last year).
While it’s always interesting to look at national average truckload rates, the dynamics of Atlanta-Miami is a reminder that capacity, demand, and rates are driven primarily by local conditions.
It’s no different between Los Angeles and Stockton.
The average reefer rate from Stockton to Los Angeles rarely equals L.A.-to-Stockton— except in the fall. From August to October, the gap between the headhaul and backhaul rate narrows to almost nothing.
Like Atlanta-Miami, the shift in California is driven by seasonal fruit and vegetable harvests.
Before you start laying odds on what Stockton-to-L.A. spot rates will be this autumn, remember what we said about local markets.
Drought conditions in Central California may very well affect demand and rates on this lane come the fall.
Also, keep an eye on potentially more labor problems
at Long Beach and L.A. ports. Despite the area’s large population and the variety of freight that moves in and out of the Los Angeles metro area, port traffic is a strong influence on local and regional freight trends.
Effect on Vans
This flip-flop effect goes well beyond the fruits-and-veggies market. Seasonal demand for reefers can flip lane rates for vans, too.
Reefer carriers compete with vans when the availability of refrigerated freight is low. But now, entering the harvest season in the Southeast, Texas, Southwest, and parts of California, the demand for refrigerated capacity is high.
The surge in demand for reefers puts a squeeze on van capacity as carriers focus assets on hauling produce. Van rates rise; hence, the Southeast typically enjoys higher rates in the spring and early summer as produce season starts sooner. The Midwest and Northeast have higher rates in the fall.
Shifting freight patterns create new opportunities elsewhere. Rates are most affected by local conditions, after all. But in some circumstances
the better rate is on the flip-side of a lane you’re already on.
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.