Truckload Rates Soar Ahead of July 4th
There may not be a lot of fireworks this year on Independence Day, but at least truckload rates are shooting up, according to DAT Trendlines.
Van spot rates rose to $1.79 for the month of June, according to DAT. That’s a big leap from the May average of $1.60 per loaded mile. Reefers took in an average of $2.14 per loaded mile, up from $2.02 in May, and flatbeds were paid $2.06, a 16-cent improvement month over month.
These are averages for the entire month of June, and prices were much lower at the beginning of the month. That means today’s rates moved up sharply in just the past week.
The dramatic rate increases were paired with huge advances in load-to-truck ratios for each equipment type. Dry van ratios soared to more than 4.3 loads per truck, up from 2.7 at the beginning of June and only 1.9 in May. (April was even worse for truckers, with load-to-truck ratios hovering below one load per truck all month.)
Demand Intensifies for Reefers in Produce Season
For reefers, the load-to-truck ratios almost doubled in the past four weeks, from 3.9 to almost 7.5 loads per truck. May’s average was 3.1. Reefers are getting back to a “low normal” level, as fresh produce harvests are boosting demand for reefer equipment in California and throughout the Southeast. California harvests typically require long-haul service, tying up those trucks for at least a week in transit, which constrains capacity.
A word about load-to-truck ratios: When there are more loads and fewer trucks, rates will go up. Yes, brokers re-post the same loads, and yes, carriers post trucks to “anywhere” or don’t post at all. It doesn’t matter. The counts don’t have to be precise. When there is an upward trend in load-to-truck ratios, higher rates follow, sometimes immediately. This is true about 90% of the time, and it’s not hard to spot reasons for any exceptions to this rule: weather events, holidays, and even weekends can disrupt the trend, often with predictable patterns of their own.
Flatbed Freight Returns to 2019 Levels
Flatbed ratios also rose sharply during the month, landing at 29.3 last week. That’s a huge improvement from the May average of 12.5 loads per truck, and this month will likely beat June 2019, as well. That’s an easy mark, because last year was pretty slow for flatbeds. Almost anything would be an improvement.
Even though the oil and gas industry is not generating its fair share of flatbed freight these days, construction and manufacturing should be bouncing back. Those freight flows usually peak in April, but big projects were delayed by COVID lockdowns, and at least some of them will be re-scheduled for the summer months. Fingers crossed. Flatbedders could use some good news.
Overall, ratios and rates have made great gains in June, which inspires hope after three of the worst months ever in freight transportation. While rates are not where they should be during a busy month, they’re going in the right direction.
The big question is whether rates will reverse course and start to fall after July 4th, as often happens. Nothing about 2020 has been normal or typical, so hopefully rates will continue to climb into the third quarter, which would be an unusual trend. As the economy begins to recover, freight should start to revive as well, due to pent-up demand at factories, construction sites, and other businesses that have been shuttered for months.
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