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Retailers and manufacturers rushed to lock in low freight rates in the first quarter as overcapacity in the trucking industry dragged on the profits of transportation companies but bolstered profits for middlemen who arrange shipments.

C.H. Robinson Worldwide, Inc. reported Wednesday net profit of $118.9 million for the first quarter, an increase of 11.7% over the first quarter of last year. Diluted earnings per share expanded from 73 cents a share in the first quarter of 2015 to 83 cents a share this year.

The company’s total revenue from arranging transportation and logistics services for companies such as Wal-Mart Stores Inc., Coca-Cola Co. and Dollar General Corp. fell 6.8% to $3.1 billion in the first quarter from the same period a year ago.

In a conference call with analysts, C.H. Robinson executives said the company received twice as many bids for freight contracts in this year’s first quarter as it usually gets at the start of the year, a sign that shipping customers were trying to bring low spot-market rates into their longer-term contracts. Freight rates for these bids were flat or lower compared with last year.

“We…currently continue to see a soft market with a lot of available truckload capacity,” said John Wiehoff, C.H. Robinson’s chief executive. “It’s a normal response that shippers would be a little more aggressive in their bid activity, and so we do see elevated levels from our standpoint across virtually all of our services.”

C.H. Robinson, based in Eden Prairie, Minn., was able to increase profits and expand its margins because as a freight broker it mostly enters into long-term contracts with customers to sell them trucking service at set prices but finds capacity in the shorter-term spot market, where prices fluctuate more quickly.

With about $13.5 billion in gross annual revenue, C.H. Robinson is the largest freight broker in the U.S. and considered a bellwether for the industry.

On Wednesday, DAT Solutions, an Oregon-based transportation data firm, reported that spot-market freight rates fell 21% in March from the same month a year ago for dry vans, the most common type of tractor-trailers used for shipping consumer goods.

Overcapacity has plagued the financial results of trucking companies over the last year, especially those that compete for loads on a daily basis in a highly fractured market, said Michael Scheid, an analyst with SJ Consulting. Trucking fleets have grown at a faster rate than demand for freight shipping in each of the last six quarters, according to Mr. Scheid’s data, as companies brought in new equipment purchased during a buying surge that started in 2014.

“It’s happening across the industry, because a lot of carriers are adding capacity and the volume of demand has not matched that,” he said. “Reducing capacity would help their profits for sure. But I think the carriers think this is a short-term event and they’re looking at the long term.”

Cowen analyst Jason Seidl wrote in a client note that nearly two-thirds of C.H. Robinson’s truckload business with shippers is priced in annual contracts, compared with a decade ago, when most contracts with shippers were shorter-term spot-market contracts.

Many analysts, including Mr. Seidl, believe large trucking companies are waiting out the soft market until 2017, when a federal mandate to use electronic logging devices, which track how many hours drivers are on the road, will take effect. ELDs, which are expensive to install and reduce the number of hours drivers can log, could potentially put hundreds of smaller competitors out of business, reducing capacity and bolstering freight rates.

 
 
In a typical seasonal pattern, spot-market freight volume edged down 3.4 percent in April compared to March, according to the DAT North American Freight Index. But, in the latest weekly report, May freight is in full bloom.

Spot truckload freight availability in April declined 8.9 percent for dry vans, volume for refrigerated ("reefer") vans slipped 9.4 percent, and flatbed volume increased 3.9 percent. Line-haul rates on the spot market declined 1.5 percent for vans, and 0.6 percent for reefers, but flatbed rates increased 1.2 percent, month over month.

Compared to April 2015, overall spot market freight availability fell 30 percent. Year-over-year declines have been following a consistent pattern in every month since January 2015, due to lower demand for transportation services in the spot market, as well as readily available truck capacity. 

Demand declined 38 percent for vans, 34 percent for reefer trailers, and 22 percent for flatbeds, year over year. Line-haul rates fell 16 percent for vans, 12 percent for reefers, and 8 percent for flatbeds in April, compared to same-month levels in 2015.

However, truckload rates on the spot market increased sharply for all three equipment types during the first week of May on the DAT network of load boards.

Driven by demand for refrigerated and dry vans, the number of loads posted on DAT boards was up 5.1% compared to the previous week. Highlights:

Reefer Loads Up 11%: The number of posted reefer loads increased 11%. Truck capacity gained 5%, pushing the load-to-truck ratio up 6% to 3.4 loads per truck. That means there were 3.4 available loads for every reefer posted on the DAT network.

Reefer Rates Surge: The national average spot reefer rate was up 11 cents to a national average of $1.90 per mile.

Florida Producing: Outbound freight volumes and rates surged in Florida, with Lakeland up 29 cents to an average of $1.91 a mile and Miami adding 23 cents to an average of $2.32 a mile. Miami-to-Baltimore jumped 41 cents to an average of $2.62 a mile.

Vans In Demand: Van load posts rose 11% and the number of available trucks was virtually unchanged. That pushed the van load-to-truck ratio up 11% to 1.8 loads per truck.

Van Rate Jumps 7 cents: The national average spot market rate for vans added 7 cents to $1.57 per mile, including a 2-cent rise in the average fuel surcharge.

Hot Van Markets By Region:

- South Central: Houston, $1.49/mile, up 5 cents

- Southeast: Charlotte, $1.77/mile, up 2 cents

- West: Los Angeles, $1.89/mile, up 3 cents

- Northeast: Allentown, Pa., $1.76/mile, up 4 cents

- Midwest: Chicago, $1.73/mile, up 1 cent


Flats Hold Steady: Flatbed load volume was unchanged while capacity increased 12% from the previous week. That led to a 11% decline in the load-to-truck ratio, from 21.1 to 18.8 loads per truck. The national average flatbed rate added 1 cent to $1.91 a mile.

Rates are derived from DAT RateView, which provides real-time reports on prevailing spot market and contract rates, as well as historical rate and capacity trends. All reported rates include fuel surcharges.

Load-to-truck ratios represent the number of loads posted for every truck available on DAT load boards. The load-to-truck ratio is a sensitive, real-time indicator of the balance between spot market demand and capacity, DAT notes. Changes in the ratio often signal impending changes in rates.