TransCore reports September spot market volumes are up 45 percent annually

Spot market truckload volumes continue to post impressive numbers, according to data from TransCore.

September volumes were 3.2 percent better than August and were up 45 percent compared to September 2010, marking the highest spot market freight availability since the aftermath of Hurricane Katrina in 2005, according to TransCore officials. TransCore added that the increase from August to September is a typical, seasonal pattern.

Truckload freight rates, excluding fuel surcharges, were up for all equipment types in September, with national average rates for dry vans up 2.3 percent in September and up 3.9 percent annually. Reefer rates were up 1.3 percent from August and up 2.1 percent annually, while flatbed rates were up 0.6 percent sequentially and 10.2 percent annually, due to high demand.

“September was very strong,” said an executive at a freight brokerage firm whom declined to be identified. “We talk with lots of carriers and shippers every week and are buying lots of transportation in the market every week. That said, September felt like the good old days when you see the seasonal surge in the September and October timeframe. What I don’t know is how long it will last in terms of lasting through this month or subsiding quickly. The last two or three years, though, we have not had as much seasonal peak as we normally have had in the pre-holiday season.”

The executive added that this data raises the question of whether the economy is as bad as it seems or possibly returning to more normal seasonality as it pertains to inventory.
As LM has reported, shippers and carriers alike have said that the spot market is still attracting 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 high, and gas prices are about a dollar higher than they were a year ago at this time.

Usually, the spot market rates are about 15 percent lower than contract rates. But this year, according to TransCore’s analysis, on a national average about 24 percent of lanes had spot market rates that were higher than contract rates during the second quarter.
While fairly tight capacity remains a driver for high spot market volumes, it stands to reason that will continue to be the case going forward.

“From an industry-wide perspective, there is a proliferation of freight brokers,” said Stifel Nicolaus analyst John Larkin in a recent interview. “We have not saturated the percentage of the market that can be brokered yet. In addition to CH Robinson being the 800-pond gorilla in this space, you also have all these other companies out there doing it, too. At the same time, most of the asset-based carriers are starting up brokerages. It is a rarity when you see a carrier that does not have a brokerage.”

As long as spot market prices run below contract market prices, Larkin said it will continue to be something shippers leverage.

What’s more, small carriers—many of whom have been flushed out of regional markets by big carriers moving into regional markets—have become increasingly reliant on brokers, because they are not large enough to have sales forces, explained Larkin. This puts these small carriers in a position where nearly all of their backhaul lanes have to be filled by brokers.