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The capacity index (supply) rose faster than the freight index (demand) for the seventh consecutive month and the 12th time in the past 14 months in March according to the most recent ACT For-Hire Trucking Index from ACT Research Co.

“In addition to ongoing weakness in domestic manufacturing, an inventory overhang continues to exacerbate new freight creation,” says Kenny Vieth, ACT’s president and senior analyst. “A return to normal inventory levels in the broader economy is the first step to improved freight market performance. However, to date the correction has been slower than expected in coming.”

Jason Cannon
Spot market freight volume got a 38% percent boost from seasonal freight in March, but the DAT North American Freight Index remains at one of its lowest levels in years, according to newly released figures.

Compared to February, van freight availability last month increased 25%, flatbed volume rose 64% and reefer volume added 16%. Despite this, linehaul rates on the spot market declined 1.4% for vans and 1.8% for reefers as flatbed rates increased just 0.6%.

Compared to March 2015, overall spot market freight availability fell 35%.

“Year-over-year declines have been a consistent pattern in every month since January 2015, due to a variety of economic factors including lower demand for transportation services in the spot market combined with loose truck capacity,” said DAT Solutions.

Demand declined 48% for vans, 45% for reefer trailers and 16% for flatbeds, year-over-year. Line haul rates fell 16% for vans, 11% for reefers, and 9.6% for flatbeds during this same time.

“A 51% decline in the fuel surcharge, which typically comprises a significant portion of the total rate intermediaries pay carriers contributed to a decline in all-in rates for all equipment types,” said DAT. “All-in rates for vans were down 21%, reefers declined by 17% and flatbeds were off 16%." The surcharge is pegged to the retail cost of diesel fuel.

The numbers are based on DAT’s network of load boards in the U.S. and Canada.

There is some hope that rates may finally be trending at least a little higher with week-to-week figures through early April showing some slight improvements.

Evan Lockridge

In certain parts of the country, especially the Southeast, the U.S. spot truck market is showing some early signs of renewal, as retailers gear up for their spring shipping season.

In the last week of March, Memphis was a hot market for truckers working the spot market, said Mark Montague, industry pricing analyst for spot market load matching service DAT Solutions. Memphis “is known for having lots of warehousing for consumer package goods,” he said.

Decatur, Alabama and Mississippi also saw higher spot market activity, Montague said, thanks to increased demand for lumber and construction materials.

DAT had already tracked an uptick in outbound spot loads from Southern California, as imports move inland from Los Angeles and Long Beach to Memphis. “Typically one follows the other,” Montague said. “Then you see markets like Atlanta and Dallas” heat up, followed by markets in colder climes, such as Chicago and the Northeast.

In the week that ended March 26, spot market outbound van rates from Memphis averaged $1.85 per mile, compared with a $1.56 per mile U.S. average and a $1.61 per mile regional average. Spot rates on the Atlanta to Orlando lane hit $2.19 per mile, though the average spot rate on the Lakeland, Florida to Atlanta backhaul lane was only 96 cents per mile, according to DAT.

Freight demand may be increasing in those markets, but overall, spot market rates are soft. The U.S. national average dropped 2 cents from the previous week. Excluding fuel surcharges, the U.S. national van average rate was $1.41 mile, also a 2 cent week-to-week drop. A year ago, that DAT average was $1.64 mile, a 14 percent year-over-year difference.

The reason for the underlying softness in van rates nationwide isn’t low consumer demand or high inventories, but lower volumes of fresh produce moving in spot market trucks, Montague said.

“Shipments of California strawberries are down, and in Florida winter rains disrupted the planning and yields of various crops,” Montague said. “Without impetus from the produce sector, you don’t see pressure on van rates. Reefer trucks are out looking for anything to haul and they’re competing with the vans. And as long as van rates are off, spot market trends remain subpar.”

Low spot demand for oil and natural gas trucking services also creates more competition in the dry van business, he said. And overcapacity among the contract motor carriers hauling most U.S. truck freight leaves shippers with fewer reasons to tap the spot market.

“We’re seeing growth (in the spot market), but it just isn’t popping without the mainstays of produce and oil equipment and drilling machinery,” Montague said. “Put those two together and it hurts a whole bunch of other things,” especially truckers’ bargaining power in pricing. "It really pays for truckers to understand that no two markets or round trips are created equal."

The Cass Truckload Linehaul Index, based on data including both contract and spot rates, has shown the annualized growth rate of truckload pricing dropping steeply after peaking in January last year, falling from 7.9 percent to 0.4 percent before rising to 0.5 percent in February.

Shippers are likely to enjoy lower spot market truck rates, compared with 2015 and 2014, for some time. “I don’t think you’ll see much happening on rates until the later part of the year,” Montague said, when pre-holiday shipping demand picks up and the effect of the coming U.S. electronic logging device mandate on small carrier capacity in 2017 becomes clearer.

William Ca