DAT Truckload Volume Index sees February declines

Following a strong start to 2023, the February edition of the DAT Truckload Volume Index (TVI), which was issued this week by DAT Freight & Analytics, cooled off in February.

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.

February’s van freight TVI—at 207—fell 8%, from January to February, and was down 5% annually. The refrigerated (reefer) TVI—at 162—was down 7.9% compared to January and off 4.7% annually. And the flatbed TVI—at 217—was in line with January’s 218 reading and up 7.9% annually. DAT observed that these lower February TVI readings are not uncommon, due to February having fewer days. 

DAT said that changes in the TVI represent the number of loads moved with a pickup date during the month. And it added that spot truckload rates are negotiated on a per-load basis and paid to the carrier by a freight broker, with DAT’s rate analysis based on $137 billion in annualized freight transactions.

DAT’s data highlighted the following takeaways for truckload volumes, load-to-truck ratios, and rates, for the month of February, including:

• the national average spot van rate was down $0.14, to $2.24 per mile and $0.63 below the average contract van rate, coming in at its lowest monthly average going back to August 2020, while falling $0.85 annually;
• the national average spot reefer rate fell $0.19, to $2.59 per mile, which was $0.57 below the average contract rate for reefer freight and down $0.95 annually, for its lowest monthly average since October 2020;
• the national average flatbed rate decreased $0.06, to $2.70 per mile, which was $0.73 below the contract average, and off $0.51 annually;
• the national average line-haul rate, which DAT said subtract an amount equal to an average fuel surcharge, fell to pre-holiday levels, with the van line-haul rate, at $1.71 per mile, off $0.12 compared to January, and the reefer line-haul rate, at $2.01 per mile, for a $0.17 decrease, and the flatbed line-haul rate, at $2.07 per mile, for a $0.02 decrease;
• the national average van load-to-truck ratio fell from 3.0 to 2.5, with 2.5 loads for every van posted to the DAT One marketplace in January, with the February ratio at 13.7 in February 2022; and
• the reefer van load-to-truck ratio was at 3.8, down from January’s 4.9 and 10 points below February 2022, with the flatbed ratio, at 13.6, up from January’s 12.5, with February 2022 at 83.9

“Truckload volumes retreated while the spread between spot and contract rates expanded to where they were before the holidays,” said Ken Adamo, DAT chief of analytics, in a statement. “February volumes and spot rates gave carriers little incentive to move away from contracted freight.”

In an interview, DAT Principal Analyst Dean Croke explained that going back to late 2023, DAT anticipated the first quarter would be much quieter than normal, saying things are playing out that way, to date.

“We did see a little bit of a bump in dry van volume in February,” he told LM. “Dry van and reefer had very strong volumes to end February, but that was really the end of month shipping surge that we would normally see. We were hoping it may be the start of some good things to come, but volumes dropped last week so it was really an end of month surge. When you look at spot market volumes, they are half of what they were a year ago. They were within 2% of the average for week 10 in pre-pandemic years and are seasonally where you expect them to be when taking out 2021 and 2022, because they were aberrations, in terms of volume.”

The reason that is a good data point, he noted, is because there is a lot of talk about supply chains are getting back to normal, congestion is easing, and February import levels are in line with May 2020 levels, at the bottom of the pandemic crash. While he called that import comparison “alarming” he said that comes with the caveat that imports only represent about 10% of truckload freight, but still serving as a reason as to why there was a lot of volatility in the market related to port congestion.

“We saw a lot of volume spill over into the truckload market,” he said. “That has largely disappeared. All that congestion and import volume is back to fairly normal March levels, which is the low point on the shipping calendar. Lots of data points suggest that it was a normal February going into March, and things are tracking pretty much about where we would expect things to be for a quarter like this.”    

Conversely, though, Croke said that capacity is trending along at much higher levels than what is seen historically, due to the record influx of carriers that really peaked in June 2021, when the motor carrier sector was adding around 8,000 carriers per month. What’s more, he said capacity is still leaving the industry but at a slowing rate.

“When thinking about carrier sentiment in the spot market, in a normal year, we add about 1,000 carriers a month, and, at the moment, we have been losing about 2,000 carriers a month since October,” he said. “But that rate of decrease has bottomed out and that sentiment still has not turned positive from a carrier perspective. We still have a way to go to get demand close to where supply is, because supply is still overshooting where demand is in the spot market. Spot market volumes are where would expect them to be. We still have a lot of carriers in the market as a hangover from 2021 and early 2022.”

Looking ahead, Croke said that, DAT has maintained there will be an inflection point towards the end of the first quarter and into the start of the second quarter, for dry van, saying that dry van rates have been trying to find a bottom in the market over the last four-to-five weeks.

“It feels like they are. There is a little bit of pessimism coming into rate forecasts, but it is about where we expected it to be,” he said. “We are at about the bottom of the freight cycle, and they would start to come back up eventually. That will be in Q2 based on the way things are shaping up right now. We are on track to do that and then, of course, in four-to-six months, we will see contract [rates] come back up, because replacement rates are still coming into routing guides at about -11%. Contract rates are still dropping in routing guides so that will persist through the first half of the year. And capacity bleeding off will tighten the freight cycle. Shippers will turn to the spot market to recoup some of their procurement costs, because the rates will be a lot cheaper and will accelerate capacity out of the industry. We are at about $1.75 per mile, and carriers cannot withstand rates going any lower. Diesel is not going down fast enough to offset higher operating costs. We are kind of at the floor now. That has held true, because carriers have been more price disciplined because diesel costs have been such a big component over the last eight or nine months.”