DAT Truckload Volume Index shows solid seasonal patterns in June

The June edition of the DAT Truckload Volume Index, which was issued this week by DAT Freight & Analytics, a subsidiary of Roper Technologies and operator of an online marketplace for spot market truckload freight, picked up where May left off, as spot market rates and volumes, for the equipment types tracked by the firm, showing a return to typical seasonal trends, due to signs of improving economic demand. 

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. Over all, the index headed up 13.7% from May to June and was up 9.4% annually. 

DAT’s data found the following takeaways for June:

• the load-to-truck ratio for vans almost doubled, for the second straight month, to 3.5, well up from an April low of 1.0, and up 12.9% annually, showing a market “with more freight than trucks on the DAT One load board network,” according to DAT;
• the national spot van rate average—at $1.80—was up 21 cents over May and off 9 cents compared to June 2019;
• spot reefer volumes rose 4.5% from May to June, driven by a increases in seasonal produce freight out of the Southwest, West Coast, and Pacific Northwest, with the national reefer load-to-truck ratio, at 5.5, more than tripling the all-time low in April, at 1.7;
• the national average reefer spot rate—at $2.15 per mile—was up 13 cents, from May to June, and down 9 cents annually;
• the June national flatbed load-to-truck ratio, at 24.8, was driven by what DAT called “surge in construction activity,” following a strong May, on the way to its highest reading since July 2018;
• flatbed volume saw a 15.9% gain, from May to June, and was flat annually; and
• the national average flatbed spot rate—at $2.07 per mile—was up 17 cents compared to May and down 10% annually

In an interview, DAT Chief of Analytics Ken Adamo explained that June slipped into a normal seasonal pattern for truckload freight volume, relative to the volatility of March, April, and May.

“From that standpoint, the month did fall in line with our forecasts and expectations,” he said. “We’re seeing dry van spot rates above $1.80 a mile, excluding fuel surcharges, which is around 10 cents higher than the same period in 2017 and 2019. For refrigerated freight, with the exception of the capacity-constrained 2018 freight market, the national average reefer rate ended June at its highest monthly average since 2015. Better rates are good news for carriers but the broader storyline is that June provided some much-needed stability for truckload markets.”

When asked if reefer and dry van conditions are fully back to pre-COVID-19 levels, Adamo said that is difficult to gauge, as the last full pre-COVID-19 month was February, which is traditionally the slowest month of the year for truckload freight, whereas June is one of the busiest. 

What’s more, he said that comparing June 2020 to June 2019, in an absolute sense, reefer and dry van freight volumes and rates are about where they were last year, with the caveat that 2019 was a lackluster year for trucking but “normal” by most accounts.

In terms of the biggest concerns, in the coming weeks and months, for spot prices and volumes, as they relate to COVID-19, Adamo said there are many things to watch for, highlighting a few specific areas.

“The first one is the general inconsistencies that come with individual states, counties, and municipalities re-opening economies based on their own guidelines,” he said. “They create uncertainty, and not every segment of the freight economy is affected in the same way. For instance, the pace of consumption at restaurants and bars, schools, sporting events, caterers, and corporate cafeterias affects the foodservice industry and, by extension, a large portion of the food supply chain, but not groceries. Back-to-school shopping is an $80 billion retail event, and when parents’ priorities shift from apparel and school supplies to online services because their kids are home, they’re still shopping but they’re making different choices than what supply chains and van carriers have planned for.”

The second part, according to Adamo, is the mix of industrial, retail, and wholesale contract and spot freight.

“The number of loads moved in June may be in line with what it was last year but the proportion of the types of loads moved is different,” he said. “If you’re a carrier with a contract to haul auto components, you’re only just now returning to pre-COVID traffic levels. Maybe you spent the last three months on the spot market hauling retail freight in order the keep the trucks moving. Or you’re a contract flatbed carriers hauling lumber because your customers in the oil and gas business are postponing or pulling back on capital projects. Again, there’s freight to move, it’s just not necessarily the freight that carriers accustomed to hauling. I’ll be watching to see how this imbalance sorts itself out.”

The third one is the health and safety of drivers and dockworkers.

“This is one of those times when shippers and receivers can distinguish themselves as a place that drivers want to come to when they’re looking for a load,” he stated. “Clear communications about appointment schedules, giving drivers a safe place to park while they wait, respecting their hours-of-service—these steps can go a long way toward keeping truckers happy.”

Truckload capacity is another thing that needs to be monitored.

“If the health crisis worsens and consumer spending plummets, the carriers left standing when we have a sustained recovery will be financially stable, with well-run operations that shippers will want to partner with,” he said. “Now’s the time to nurture those relationships.”

As for whether or not there will be anything resembling a typical Peak Season in 2020, as it relates to truckload freight, given the high amount of market uncertainty at the moment, Adamo pointed to the DAT Ratecast predictive model showing that the national average spot van and reefer rates likely peaked after the first week of July.

“Those forecasts are based on actual transactions and factor in rate momentum, seasonality, broad trends—the data is refreshed every day and the model is only getting smarter,” he said. “For freight volumes, the simple truth is that in a consumer-driven economy, it’s essential for people to feel confident that they can go to the store, eat in a restaurant, get on a plane, test drive a car, or go a ball game with minimal risk to their health. They also need job security and money to spend. That time will come. When it does, perhaps around Q2 of next year, we’ll see normal seasonality return to the truckload freight market.”