December spot market activity turns in record-setting performance, reports DAT

December spot market availability saw a 10 percent gain over November and a 45 percent annual hike, according to data recently released by DAT, a subsidiary of Portland, Oregon-based TransCore, in its DAT North American Freight Index.

Company officials said this impressive gain was the result of atypical season patterns, noting that freight levels usually peak in the second quarter and subsequently tail off the rest of the year, whereas in 2013 the market stayed firm throughout the year.

What’s more, the index found that the impressive annual gain in December represented a sixth consecutive record for same-month freight volume, adding that December is the highest level for the month going back to 1996, when the index was established.

Looking at December load availability volumes, DAT observed that they increased: 19 percent for vans, 14 percent for refrigerated trailers, and 1.0 percent for flatbeds on a sequential basis, and they each headed up 41 percent, 65 percent, and 43 percent, respectively, annually.

And in the spot market rates for vans were up 5.0 percent for a monthly average of $1.95 per mile, which DAT said is the highest rate since it first started publishing these rates in 1999, with refrigerated and flatbed rates moving up 3.2 percent and 3.8 percent, respectively, sequentially. Annually, spot market rates were up 15 percent for vans, 6.7 percent for refrigerated, and 7.8 percent for flatbeds, said DAT.

David Schrader, senior vice president of DAT’s freight matching business, told LM that part of the reason for the increase in December spot market activity is related to how the holiday season was laid out, as there was one less week between Thanksgiving and Christmas, coupled with severe weather conditions in many parts of the country.

“It is not just about the holidays and weather, though,” he said, “we have seen abnormally strong freight volumes through the second half in total, which is not something we typically see. Some drivers for this have been energy and fracking, and increased automotive activity. There are a number of different sectors that have contributed, which makes it pretty broad-based in general.”

On a year-to-date basis in 2014, Schrader said that the momentum from 2013 has continued into this year, explaining that much of what occurs in the spot market is based on carrier behavior.

He explained this is comprised of ebbs and flows as freight gets tight carriers increasingly are searching for loads and posting their equipment. Conversely, when capacity is tight, brokers and shippers tend to do a lot of posting and searching, with carriers tending not to post their capacity and instead search in a similar manner.

“We are seeing a lot more of that behavior, where carriers are just not actively posting their capacity and are definitely as a result seeing some capacity tightening going on in the market, which is helping to drive spot market rate growth,” he said.

Regarding the motor carrier Hours-of-Service rule changes that took effect last July, Schrader said that the impact on available capacity of about 3-to-5 percent is not as bad as once was thought but noted there is still some effect there, explaining that anything that has the effect of limiting capacity-or make capacity less efficient– is going to drive up spot market rates.

Robert W. Baird & Co. analyst Ben Hartford wrote in a research note that the increased spot market activity in November and January saw demand for spot truckload capacity head up, due to weather-related disruptions, seasonal demand improvement, and ongoing driver regulatory constraints, adding that “Emerging volatility could support reaccelerating industry rate growth in 2014.”