Price hikes in the US truckload spot market appear to be slowing in early October, although they remain at record high levels. Data from DAT Freight & Analytics, Loadsmart, Truckstop.com, and JOC show a slower rise in spot rates, which may indicate the US freight market is calming, at least temporarily, after a tumultuous September and end-of-the-month shipping rush.
A slowdown in the rise of spot rates could mean contract truckload rate hikes may come in 2021, as opposed to the last months of 2020, giving shippers more time to get budgets in order.
Data on prices paid by US shippers show truckload spot rates ascending rapidly from May through August and then climbing more slowly last month both nationally and in several leading outbound and destination freight markets. The JOC average national shipper retail spot market dry-van rate was $2.59 per mile in September, based on data from Loadsmart and DAT.
That is a 4.9 percent increase from August, when the average rate was $2.47 per mile, up 10.8 percent from the previous month. That followed increases of 18.6 percent in July and 15.3 percent in June. The average hit a low point of $1.63 per mile in May after dropping from $1.90 per mile in March.
A similar pattern can be detected in many origin and destination pairings. Average rates from the Southwest, including California, Arizona, and Nevada, rose 5 cents from August to $3.27 per mile in September, after climbing 33 cents in August from July. Outbound Los Angeles rates, which averaged $1.57 per mile in April, were only up by 1 cent in September, to $3.37 per mile.
Northeast and Midwest inbound rates show a similar slower rate of increase for September. The Midwest dry-van average last month rose 6.1 percent to $2.79 per mile after climbing 11.9 percent in August. In the Northeast, the average rate rose 10 cents in September after a 15-cent per mile gain in August. Those are prices paid by shippers to brokers and carriers.
Potential pricing plateau?
Slower growth off record highs means the US truckload spot market is still in unprecedented territory, and no one expects spot pricing to begin a descent. But a pricing plateau would allow shippers that have been driven to the spot market for capacity a chance to catch their breath. Year over year, however, the JOC.com national average is still up 31.5 percent.
DAT’s national dry-van average spot rate climbed 1 cent in the week ended Oct. 3 to $2.19 a mile. The weekly measure, which excludes fuel surcharges, hit a peak of $2.21 per mile Sept. 5, fell back to $2.17, and then moved to $2.18 per mile the rest of September. The DAT average fell as low as $1.34 per mile May 9 and has risen 63.4 percent since then.
“Spot market rates just keep climbing as companies turn to the spot market to help them manage imbalances in their supply chains,” Ken Adamo, chief of analytics at DAT, said in a statement Monday. “We’re seeing strong volumes across equipment types as the economy continues to recover, particularly in areas related to consumer spending.”
Demand from the industrial and energy sectors continues to lag, however, Adamo said. DAT’s September FMIC Pulse Signal report, which benchmarks $50 billion in shipper transaction data, forecasts changes in active contract rates will remain below 2019 levels through the end of 2020, with average contract rates most likely increasing in the first and second quarters of 2021.
Data from digital load board operator Truckstop.com could foreshadow further slowing, and a minor reduction in pricing. Truckstop.com reported a 0.4 percent drop in market rates to $2.44 per mile in the week ended Oct. 9. Van rates dropped 0.9 percent to $2.40 per mile. Load volumes in its system dropped 7.6 percent while truck postings increased 7.9 percent.
Those decreases off record highs could reflect a slight relaxation in demand after a vigorous push by retailers and other shippers to get freight to its destination by the end of the month. Truck postings increased for only the second time in 11 weeks, Truckstop.com partner FTR Transportation Intelligence said in its weekly analysis of truckload freight trends.
