July spot market activity dips down from June but is up annually, reports DAT
August 11, 2014
As has been the case for several months, heavy spot market activity remains prevalent in the freight transportation market, with July turning in another strong performance, according to recent data published by Portland, Oregon-based freight marketplace platform and information provider DAT.
For the month of July, DAT said that the van load-to-truck ratio came in at an average of 3.2 percent, which was down significantly from June––by 26 percent––and was up 23 percent compared to July 2013.
DAT defines load-to-truck ratios as the number of loads posted for every truck posted on DAT load boards, with the ratios serving as a “sensitive, real-time indicator of the balance between spot market demand and capacity.”
While June was a record-setting month, July was not as strong but still impressive. Spot market activity has been well above levels in recent years for various reasons, explained DAT, including: disruptive Q1 weather; an improving economy; seasonal fluctuations of freight and capacity; and shippers relying more on 3PLs to secure freight and meet the needs caused by the growing volume of exception freight.
The average reefer load-to-truck ratio dropped 21 percent to 9.1 from a June seasonal high of 11.5, said DAT, with the annual load-to-truck ratio up 15 percent annually in July. And flatbed load volume in July fell 11 percent compared to June and capacity rose 14 percent, which saw the load-to-truck ratio fall 22 percent. Even with this decline, though, DAT noted that on an annual basis July saw 52 percent more flatbed loads and 19 percent fewer trucks posted, leading to an 88 percent gain annually in the flatbed load-to-truck ratio.
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.
Mike Regan, Chief Relationship Officer at TranzAct Technologies, said in a recent interview that current trends on the spot market are strong, as the DAT data indicates
But he noted the underlying reasons as to why that is the case are not always prescient.
“Some people point to a stronger economy, but it might have more to do with the discipline of the carriers in terms of how they run their equipment and maintain strong pricing,” he said. “More carriers can make more money running fewer trucks, a carrier CEO recently told me. And call-to-haul factors for each piece of equipment are running especially strong and allowing them to maintain discipline on the pricing side. I don’t know if the gains we are seeing are as much a product of demand as they are of pricing.”
When asked if the spot market volume gains and rate momentum can carry over into the second half of the year, Regan noted that remains to be seen.
“The fact that the spot market is this strong at this time of the year tells me things could be slower in the September and October timeframe,” Regan said. “There is also the question if we are seeing a shortening in the cycle of back-to-school shipments and that type of stuff. And many larger carriers are still talking about idling capacity because they cannot find enough drivers. If GDP heads up over 2 percent, people may have a tougher time finding trucks than they already are.”
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