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Trucking news: Spot market rates continue their ascent

By Jeff Berman, Group News Editor
June 16, 2010

As truckload capacity continues to tighten, spot market rates continue to rise.

That appears to be the consensus based on research released by Avondale Partners and TransCore.

In a research note issued this week, Avondale analyst Donald Broughton wrote that since the Avondale Truckload Spot Market Index went positive year-over-year in November 2009 for the first time in more than a year, the index continues to rise at a very impressive—in fact, record setting—rate.

The Avondale report stated that its index continued to show steady improvement on a three-month average basis, coming in at a 253 percent increase in May, which was down slightly from April’s 260 percent gain. Despite the significant increases, Broughton noted that the year-over-year strength is somewhat exaggerated by the severe weakness in last year’s index.

“On a nominal basis the index reported a stronger reading than all historical levels reached for the month of May, as it did in April,” wrote Broughton.

“The result suggests that in the spot market, the ratio of the number of loads available versus the number of trucks available has improved so dramatically that contract market pricing has to move up materially.”

TransCore reported that its North American Freight Index saw a 3.2 percent decline in May from April, following 25 and 44 percent month-to-month gains in April and March, according to published reports. Even thought May was down sequentially, TransCore said load volume in May reached its highest level for the month in ten years.

“Spot prices have moved up dramatically, and I expect that by the end of the third quarter if will show up in data from publicly traded carriers,” said FTR Associates Partner Noel Perry. “And it takes time for price changes to mature [which impacts pricing]. If you sign a contract in December, prices won’t change until the next December.”

About the Author

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Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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