Spot market finishes 2014 strongly, reports DAT

Data recently issued by DAT, a subsidiary of Roper Industries, noted that spot market freight volume in December finished the year on a high note.

Compared to November, spot market freight volume was up 3.0 percent, according to the DAT North American Freight Index. This gain is somewhat atypical in the fact that historically December has seen declines in 11 of the last 15 years, explained DAT.

On an annual basis, spot market freight volumes were up 11 percent in December, marking the 18th straight month of annual gains.

From November to December, DAT said freight volume was up 5.3 percent for vans and 4.1 percent for refrigerated trailers, with flatbed freight availability down 1.2 percent. On the rate side, it said truckload rates were up 4.3 percent for vans, 2.1 percent for refrigerated, and 1.6 percent for flatbeds.

And from December 2013 to December 2014, DATA said freight volume was up 27 percent for vans, 18 percent for refrigerated, and 11 percent for flatbeds, with rates also seeing annual increases, as van rates headed up 15 percent, reefer rates increased 24 percent and flatbeds saw a 13 percent gain. DAT also explained that load availability was down for specialty trailers and other equipment types sequentially and annually. 

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.

KeyBanc Capital Markets Analyst Todd Fowler wrote in a research note that
spot rates remain elevated and positive annually early into this year despite difficult comparisons in early 2015, with sequential moderation in line with seasonal variations.

“We expect moderation to continue in coming weeks with comparisons increasingly difficult into mid-February, but overall, expect rates to remain elevated considering structural capacity constraints (drivers, regulations, rails and ports to a lesser extent) and support pricing momentum into the upcoming contractual bid season,” he wrote. “Our current estimates reflect low single-digit increases in revenue per mile for 2015, which may prove conservative based on recent due diligence.”

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. “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. What we saw was that so many people were not expecting the onslaught that they got hit with in 2014, with spot market prices being driven so high and contractual prices just not as prevalent as more can be made on the open spot market.”