August spot market freight volumes see gains, says TransCore

Spot market freight volumes in August saw an 8.4 percent annual gain, according to data released by TransCore’s DAT North American Freight Index this week, marking the sixth time in 2012 monthly volumes have been up year-over-year.

The index measures spot market freight availability on the company’s network of United States and Canada load boards.

TransCore also stated that August spot market freight volume was up on a sequential basis, topping July by 1.1 percent, which it said is on a “typical” seasonal pattern.

While there was a gain in sequential volumes, August, truckload freight rates dipped as is the norm on a seasonal basis from peak levels in June but were up annually, according to TransCore.

Dry van rates were down 5 percent from July but up 2.3 percent annually, and refrigerated rates were down 4.7 percent from July and up 5.8 percent year-over-year. Flatbed rates fell 1.1 percent from July and were up 2.9 percent compared to August 2011. TransCore said that rates are derived from the DAT Truckload Rate Index and do not include fuel surcharges, with spot market rates paid by brokers and 3PLs to carriers.

Even though August volumes were not at June levels tight capacity and limited truck availability has helped motor carriers regain pricing power, which was largely lost during the depths of the recession and has been trending back into carriers’ favor since mid-2010, according to anecdotal reports.

And as LM has reported, shippers and carriers alike have said that the spot market is still demanding top dollar rates, as carriers are reluctant to add capacity at a time when the economic recovery appears tenuous, retail sales are flat, unemployment is still high, and gas prices remain higher than they were a year ago at this time.

Typically, what drives higher volumes is a capacity shortage, said David Schrader, SVP/Operations for TransCore, in a recent interview.

“More freight tends to flow into the spot market…to brokerages and 3PLs as the economy tightens. That is what happened in 2011, and it is what we expect to happen in 2012, too. We would expect the same sorts of increases in the spot market going forward. It is a very good time to be in the brokerage space, and what you are seeing is brokerages that are capitalizing on the opportunity.”

Carriers are also benefitting from the spot market, too, according to Schrader, in the form of rate increases and utilization.

Despite these trend lines, shippers are holding their own in a market which currently sees carriers with the upper hand when it comes to rates.

“Our Carrier Management Program focus over the last few months has been increasing first time tender acceptance compliance,” said Joshua J. Dolan, director of transportation at Dick’s Sporting Goods in Pittsburgh, Pa. “We’re seeing our own internal need for spot freight reduce with the exception of expected instances. There are some potential issues with the amount of freight that has been routed through the West Coast with the potential ILA strike.”

Because of this, Dolan said his company could all see its existing carrier partners have a more difficult time supporting its West Coast surge demand. But he explained that Dick’s has also been working to increase visibility through collaborative planning to mitigate risk, and its carrier partners, he said, have done an excellent job supporting Dick’s overall increasing inbound demand and expect they will do the same throughout the balance of the holiday peak.

Robert W. Baird & Co. analyst Ben Hartford wrote in a research note that his firm’s “contacts note that spot truck demand in August has been below expectations” and “Paid deadhead to the West Coast has not materialized, unusual for late August, and contacts are not yet seeing the seasonal tightening of capacity off the US West Coast.”