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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
 


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