The most recent edition of the DAT Truckload Volume Index (TVI), for the month of January, which was recently released by DAT Freight & Analytics, reached new high levels, according to DAT.
The DAT Truckload Volume Index reflects the change in the number of loads with a pickup date during that month, with the actual index number normalized each month to accommodate any new data sources without distortion, with a baseline of 100 equal to the number of loads moved in January 2015. It measures dry van, refrigerated (reefer), and flatbed trucks moved by truckload carriers.
January’s reading—at 229—was off 3% compared to December, but it still represented the highest-ever TVI reading in January, while posting a 15% annual increase. DAT said that the number of loads posted to the DAT One load board network saw a 34.7% increase, from December to January, and were up 104.7% annually.
DAT’s data highlighted the following takeaways for truckload volumes, load-to-truck ratios, and rates, for the month of January, including:
“Load-to-truck ratios on the DAT load board network hit record highs for January, a sign of exceptionally strong demand for truckload services,” said Ken Adamo, DAT Chief of Analytics, in a statement. “While the number of loads moved gradually eased throughout the month, tight capacity and disruptions due to winter weather and COVID-19 helped push rates to historic levels.”
When recently asked if a $3 per-mile spot van rate is sustainable, Adamo said that is likely not the case. He compared it to what he called the “100-truck problem.”
“If you assume a fleet has 100 trucks, historically, 12-to-15 of those are running the spot market, and the other 85 or so are running contract freight,” he said. “That is harmony, because the 12%-to-15% running on the spot market might be repositioning, or cancelled loads, or it might be an out of sequence shipment so they come to the spot market. What we saw throughout the year and peaking at the end of the year was maybe 30 or 40 of those trucks being used in the spot market. Carriers would tell you they would love to see it that way forever until the spot market eventually craters back down to $1.50 per mile. They would see that as not sustaining profit margins.”
He explained this represents a two-ended network, and with shippers it is continuing to ratchet up what they are willing to lock in on the contract side. And he said shippers are telling DAT they are seeing success, especially rounding 2021 and into 2022, getting commitments from carriers on the contract side.
“Relative to the 100-truck problem, operating a 30-70 spot-contract [ratio] will slowly switch back, whether it is by the end of the first quarter and contract gets back to the 75-80 range,” he said. “If we are at 85 by the end of the year, that will necessarily ease rates in the spot market.”
When asked about what shippers and brokers need to be focusing on, relative to spot freight, at this point of the year, Adamo said brokers should be trying to get aggressive on contract bids, as they are currently at a point, in a sense, in which they are at the top of a pretty high mountain, as it pertains to rates.
“You know shippers are looking for stability, in terms of service and price,” he said. “They are really willing to trade off what they are paying for stability and are willing to trade volatility for higher price and stability. At the end of the day, I am a little more willing to get aggressive on contracts, whereas last year I would not have been, because I would have missed out on 50%-to-60% price increases.”
On the shipper side, he said they need to be very mindful of the 100-truck problem, thinking about where the market is going to shifts and understanding there is not a need to overcommit to the contract market.