Spot market and volume gains are evident in May’s DAT Truckload Volume Index

The May 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, showed signs of recovery in May, with truckload volumes recovering to pre-COVID-19 levels and getting closer to normal seasonal patterns.

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 0.6% from April to May and was down 8% annually.

DAT’s data found the following takeaways for May:

• the load-to-truck ratio almost doubled to 1.9, from April to May and up slightly from a year ago;
• the national spot van rate average—at $1.58 per mile—slipped 4 cents from April to May and was off 21 cents annually;
• spot reefer volumes headed up 10%, from April to May, due to seasonal produce freight, with increases in fruit and vegetable harvests;
• the reefer load-to-truck ratio was 3.1, up from April’s all-time low of 1.7;
• the national average reefer spot rate—at $2.01 per mile—rose 9 cents over April and fell 14 cents annually;
• the national flatbed load-to-truck ratio—at 12.5—saw gains over April’s all-time low of 5.3, while remaining below March’s 21.8;
• May flatbed volume rose 5%, from April to May, and was down 17% annually; and
• the national average flatbed spot rate—at $1.90—was 3 down 3 cents compared to April and is at its lowest level going back to September 2016

In an interview Ken, Adamo, DAT Chief of Analytics, explained that current spot market activity levels are in line with where things were in 2019, 2015, and 2017.

“It is kind of that seasonal peak,” he said. “The thing is the year plays out quite differently from here on out. 2019 and 2015 each sort of crested out of the produce and spring shipping season and had fairly mediocre second halves of the year. 2019 shot out of a cannon, and in 2017 Hurricane Harvey pretty much lit things on fire to end the year. And 2018, as we all know, from a rate perspective, was a landmark year. It is good to see things recover on the reefer and dry van side to pre-COVID-19 levels, where we were sitting before. What will be interesting to see is how bullish are retailers and wholesalers heading into the fall season. I think that will play a lot into what the rate picture looks like over the third and fourth quarter.”

And Chris Caplice, Chief Scientist for DAT Solutions, head of the Freight Market Intelligence Consortium, which DAT recently acquired from Chainalytics, and Executive Director, MIT Center for Transportation & Logistics, said that in looking at the May data, there are a few different perspectives in which to approach things.

“In a way it is a tale of winners and losers, as things relate to the contract market,” he explained. “On one hand, industrial volumes are down 50%, and that volume has moved out of the market. On other hand, retail volumes are up10% across the board. If you look at retail by itself, there are winners and losers there. Essential items like food are moving like gangbusters, whereas things like clothing are not. If you look at individual companies, there are winner and loser lanes…and it creates an imbalance in their networks and is not uniform. For truckload, that can be devastating, as carriers build their networks based on steady freight flows. But suddenly empty miles can throw things out of whack to cover a load. If a carrier needs to cover a load for a major shipper, they are going to cover it, but the empty miles might go away by up to 20%, 30%, 40%, 50%, but they will still do it. The net effect of this is that we are seeing shippers be highly dependent on their routing guides, and we are seeing a little bit of that with them shifting away from their primary carriers. We are not seeing a huge increase in rates. In fact, we are seeing a decline in rates.”

Caplice also observed that the market has recovered from the peak capacity environment, from the shippers’ perspective in 2018, at 3% growth over the last seven years. Looking ahead, he said soft market conditions are expected until either a number of carriers go bankrupt, which will take capacity out, or the economy heads up significantly.

When asked about the 8% annual decline in the DAT Truckload Volume Index, from a “big picture” perspective, DAT’s Adamo said it speaks to a tale of two halves of the month.

As an example, he said that some states started to reopen their economies over the second and third weeks of May, with some related figures, like retail and consumer spending, lagging a bit. But, for the end of May, those figures represent an entirely different time period, when compared to earlier in the month.

“Rolling into May, it was essentially an evaporation of demand, and around that time a lot of restaurants were reopening, but there was a lot of talk about how the ones doing take out had found their sweet spot, he said.

Load-to-truck ratio: In describing the May load-to-truck ratio, at 1.9, which was nearly double that of April’s, Adamo said that the key message in looking at that metric is that things stalled out a bit over the last two weeks, leaving the question of how hard does it snap back after the July 4 holiday.

“That is what we are going to be watching as the Personal Paycheck Protection funding and small business lending is going to run out,” he said. “That is going to be where the rubber is going to meet the road and show the true economic conditions.”

Caplice was in agreement with Adamo, in that what happens in July will be the big picture, in that it will the impact of states opening up the economy at different times, coupled with increases in COVID-19 cases, will not translate into what he called a uniform recovery over the summer and into the fall.