April spot market data from DAT shows gradual return to seasonal conditions

Spot market activity appears to be returning to a more seasonal pattern after a difficult winter, according to data issued this week by Portland, Oregon-based freight marketplace platform and information provider DAT.

DAT said that while spot market freight volume for April was up 51 percent compared to April 2013, total freight volume actually fell from March to April by 8.8 percent. What’s more, the firm said this is only the second time a March to April decline has happened in the last five years. Van and refrigerated (reefer) freight dipped 22 percent and 25 percent, respectively, from March to April, with flatbed showing a seasonal pattern growing 10 percent.

DAT’s data for the month showed that on an annual basis in April:
-freight designated for vans was up 48 percent;
-refrigerated (reefer) freight was up 53 percent; and
-flatbed freight was up 66 percent

On the rate side for April spot market activity, DAT reported that van rates were up 20 percent annually, with flatbed rates up 12 percent. From March to April, van rates were off 3.8 percent from what was a record-setting month in March, which was likely a byproduct of the difficult winter weather conditions that had a major impact on available capacity. And that situation was exacerbated when railroads had to deal with service issues that pushed freight over to motor carriers at a time when their networks were already stressed.

Other factors impacting spot market capacity availability, volume, and rates include the ongoing driver shortage and the rising costs of equipment.

“While comparisons have normalized following the impact of 1Q14 weather and timing of Easter, rates remain above prior-year levels 2Q-to-date, reflecting, in our view, sustained tight capacity from regulatory changes and reduced supply, as well as modest increases in underlying demand,” wrote KeyBanc Capital Markets analyst Todd Fowler in a research note. “We expect additional firming as produce, beverage and spring merchandise shipments more fully materialize in the coming weeks, and believe these factors have altered shippers’ perception of market dynamics, supporting greater contractual increases going forward, as is evident in pricing commentary from recent truckload earnings reports. Our current estimates assume 3 percent increases in revenue per mile for 2014, but could prove conservative based on our due diligence.”

Tom Nightingale, president, transportation logistics, for Genco, a Pittsburgh-based 3PL, said in an interview that his company has seen supply and demand for capacity come down from the near-crisis levels of January and February, noting that the market still remains tighter than it has been in years. 

“There are pockets of the country that are exceptionally tight, but as a whole the industry seems to have worked through some of the backlog created during those months and has found a new, tighter, norm than we have seen in a long time,” he explained.  “Our team is getting our customer’s freight covered, but it’s taking a lot more work and deeper carrier bench-strength than it was at this time last year.”