DAT’‘s April Truckload Volume Index sees volume momentum as excess capacity remains intact

Some spot truckload rates, for certain truckload segments, trended down in April while volumes inched up, according to the new edition of the DAT Truckload Volume Index (TVI), which was recently issued by DAT Freight & Analytics.

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.

DAT’s data highlighted the following takeaways for truckload volumes, and rates, for the month of April, including:

• the van TVI, at 278, up 7.3% compared to March;
• the refrigerated TVI, at 213, up 5.4% compared to March;
• the flatbed TVI, at 304, increased 8.2% compared to March, rising for the fifth consecutive month;
• the national average spot van rate, at $1.99 per mile, was off $0.01 compared to March and down $0.07 annually, falling for the third consecutive month;
• the national average spot reefer rate fell $0.03 compared to March, to $2.32 per mile, down $0.09 annually, falling for the third consecutive month;
• the national average spot flatbed rate, rose $0.02 compared to March, to $2.53 per mile, down $0.14 annually;
• average line-haul rates came in at $1.53 per mile for van, $1.82 for reefer, and $1.98 for flatbed;
• average line-haul rates, which subtract an amount equal to an average fuel surcharge, came in at $0.46 for vans, $0.50 for reefers, and $0.55 for reefers, which DAT said were unchanged from March;
• the contract $0.01, to $2.83, also down for the third straight month, with the contract van rate down $0.02, to $2.45 per mile, and the average contract flatbed rate up $0.03, to $3.18; and 
• the margin between spot and contract rates, at $0.45, fell $0.01, with reefers, at $0.51, for a $0.02 increase, and flatbeds, at $0.65, up $0.01 (DAT said a lower spread typically indicates more pricing power for motor carriers)

“Increases in April load volumes were not sufficient to offset available truckload capacity,” said DAT Chief of Analytics Ken Adamo in a statement. “If we don’t see upward pressure on truckload rates in May, when produce and other seasonal freight usually hits the spot market, then we’re probably looking at a broader discussion about the economy. Demand for trucks will certainly pick up in May and June. The question is whether the seasonal gains will be sustainable throughout the year. As we saw in April, small increases in volume aren’t enough to offset the amount of truckload capacity in the market. Shippers remain in the driver’s seat when it comes to pricing.”

In an interview with LM, Adamo described April as “boring,” in terms of what the market and data was indicating, coupled with an extra operating day in the month as well.

Contrast that with May, to date, and he noted that April feels like a long time ago, in a sense.

“There has been a lot happening in May,” he said. “Roadcheck week gave the real shot in the arm we were hoping for from a rates’ perspective,” he said. “We have seen that really give a spike in activity. It was the first time we were talking about tight capacity, outside of the holidays, in the better part of a year, if not back to Roadcheck of last year. Where things settled looks to be a few cents per mile lower than last year, which I think makes a lot of sense.”

During Roadcheck last year, Adamo explained that going into the week rates spiked up and then pretty much remained at that level over the balance of the year, adding that through attrition a few thousand carriers have left the market since then.

“My suspicion is that we will probably see a stronger tail end of May heading into June than we did last year,” he said.

When asked about how things could look as imports continue to rise heading into Peak Season, he said that is not likely to heavily impact spot market activity as a large number of those imports will be subsumed by the largest truckload fleets.

“We are not hearing a lot of chatter that drayage capacity is constrained much at all,” he said. “Railroad capacity seems to be perfectly fine. Now is a good time if you need to speed up or protect from damage or protect from delay to move something long-haul over the road. It is not nearly as cost-prohibitive to do that now as it is during a typical period.

So, to the extent that with the late spring, early summer volume coming in, shippers will have a lot of options to get that moved. As we head into the fall, I think you'll start to see some of that constraint become a little bit more apparent. There's been a lot of driver wage increases and benefits, and insurance has changed quite a bit. I think like just from a general cost portfolio, there might be more incentive to shift some things in the spot market heading into the fall, which, I think, should boost volumes.”