Truckload spot volume and rates for the month of February are down annually, reports DAT

Truckload spot volume and rates for the month of February were down on an annual basis in February, according to data issued this week Portland, Oregon-based freight marketplace platform and information provider DAT, a subsidiary of Roper Industries, in its DAT North American Freight Index.

DAT said that spot market freight availability in February was down for the second month in a row, which it described as a “seasonal pattern that mimics the first quarter of 2014 but at a higher volume.”

The company reported that spot market freight volume in February dropped 6.0 percent in February compared to January and was down 37 percent annually when compared to harsh winter weather conditions from the Polar Vortex a year ago, which subsequently led to higher than normal demand.

DAT reported that freight volume dropped in February for each of the three equipment categories it tracks, including:
-vans down 3.9 percent compared to February and 34 percent annually ;
-flatbed down 3.4 percent compared to January and 45 percent annually;
-refrigerated or “reefer” down 18 percent compared to January and 15 percent annually

DAT said that national average spot truckload rates saw sequential declines in February for vans, flatbeds, and reefers, which were down 1.9 percent, 3.2 percent, and 5.2 percent, respectively. But on an annual basis, February spot market rates were up, with DAT explaining that the gains compensated for declining fuel surcharges. Van rates and reefer rates were up 6.7 percent and 7.7 percent, respectively, with flatbed rates seeing an 8.4 percent increase.

While harder annual comparisons due to the harsh winter weather dimmed February 2015 volumes and rates to a degree, BB&T Capital Markets Analyst Thom Albrecht observed in a research note that the spot market’s relative weakness in January and February was not overly concerning.

“Yes, it was weaker year-over-year but compared to the previous 8 or 9 years the spot market and capacity generally remained tight,” he wrote. “Two events, beyond a more mellow winter (notwithstanding our friends in Boston, Buffalo, etc.) are impacting the spot market, one short-term and one longer-term. Short-term includes the port congestion, which almost 275,000 containers at all the western ports in late February, nearly double a normal amount. Long-term though, shippers are proactively trying to bring down their spot spend this year, converting many lanes to asset-based carriers. The goal is two-fold: a) to improve service and, b) to manage costs, especially during surges later this year.”

Despite the declines in recent months, A general consensus for the ongoing strength in the spot market––for both volume and rates––among industry stakeholders is tied directly to the capacity shortage, with larger shippers running routing guides awarding lanes to carriers and brokers when they suddenly cannot get capacity and then needing to turn to brokers in the spot market.

Shippers and carriers have told LM that the ongoing driver shortage and government regulations like HOS and CSA continue to lead to frequent spot market usage.

Industry stakeholders largely maintain that the spot market is largely dealing from a position of strength, though, early into 2015.

“A lot of how things play out in the spot market depends on how the winter goes,” said Joel Clum, president of Chicago-based freight transportation and logistics consultancy CarrierDirect, in a recent interview. “People who are educated on how to utilize the spot market did very well last year, both on the trucker and broker side. We saw rates continue to go up along with the conversion between dedicated and the spot market in some markets. The spot market is going to continue to be strong. Procurement specialists for shippers and brokers need to continue to get smart on procurement strategies in both contractually-driven markets and spot markets.”