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Capacity Tight, Rates Remain Up

September 8, 2020

As the saying goes, what goes up must come down, but not just yet in the freight market. Capacity remains tight in the United States, declining to a 22-month low while rates are still moving upward. Truck pricing on the spot market reached a 19-month high last week. 

 

Spot rates have increased 30% year over year and with the holiday season just ahead, capacity is expected to remain tight throughout the end of 2020.

 

The import market is still pushing goods from the West Coast into the rest of the country in preparation for the holiday season. According to Freightwaves, the surge in volume of imports has peaked and we can now expect it to steadily decline until the end of the year. The numbers, however, are still significantly above September 2019 volumes (49%) and 2018 (23%). 

 

September is never a slow month for freight, even during a traditional year, but with the volatility of the market this year, shippers should try to book their freight as far in advance as possible. When contracted carriers fall off, shippers will be risking paying higher rates on the spot market. 

Weekly market updates help you identify areas where freight capacity is tight as well as areas that are loose and easier to cover. This helps you better understand the market and provides a basis for your pricing.

 

Spot Market Rates & Volume  

The graphic below shows a weekly view of the month-to-date national average spot rates from DAT from August 31 through Sept 6, 2020.

 

Overall Spot load posts are up +1.4% w/w , but up 9.8% m/m

Dry van: Load-to-truck ratio is up 1.6% w/w, up 20.8% m/m and 135.4% from 2019.

Dry Van Spot Rates: Rates are up 4.8% w/w, up 9.0% m/m, and up 22.3% y/y

Reefer: Load-to-Truck ratio is down -2.6% w/w, up 26.4% m/m, and up 108.3% y/y.

Reefer Spot Rates: Rates are up by 3.3% w/w, up 6.3% m/m, and up 14.0% y/y.

Fuel prices have not changed.

 

spot ratessep7

 

Spot Market Rates & Volume  

The graphic below shows a weekly view of the month-to-date national average spot rates from DAT from August 31 through Sept 6, 2020.

Overall Spot load posts are up +1.4% w/w , but up 9.8% m/m

Dry van: Load-to-truck ratio is up 1.6% w/w, up 20.8% m/m and 135.4% from 2019.

Dry Van Spot Rates: Rates are up 4.8% w/w, up 9.0% m/m, and up 22.3% y/y

Reefer: Load-to-Truck ratio is down -2.6% w/w, up 26.4% m/m, and up 108.3% y/y.

Reefer Spot Rates: Rates are up by 3.3% w/w, up 6.3% m/m, and up 14.0% y/y.

Fuel prices have not changed.

 

pricingpower9-7

Contract Market - Outbound Tender Volume & Rejection Rates 

 

The average U.S. van truckload rejection rate yesterday was at 26.95%. That is more than a quarter of all truckload shipments being rejected. Reefer rejection rates have soared even higher to an average of 38.79%. (See graphs below)

 

Markets with largest volume gains:  

  • Jacksonville, FL 22.59%
  • New Orleans, LA  22.47%
  • Madison, WI  32.33%
  • Charleston, WV  29.95%

Markets with largest volume declines:

  • Miami, FL  19.10%
  • Springfield, MA  27.82%
  • Lubbock, TX  13.45%
  • Mobile, AL  16.12%

Outbound tender rejections

The graphs below show activity for outbound tender volumes and outbound rejection rates year-to-date in the United States. The blue line shows vans and the green line shows reefers. The data is compiled from the heaviest shippers in the contract market.

(Graphs below courtesy of Sonar/Freightwaves)

OTVI van vs reefer

OTRI Van vs Reefer-1

 

Capacity This Week

Dark red areas (hot spots!) on the map show where capacity is tightening. Rates in these areas will be higher than in blue areas of the map where capacity is loose. As an example, reefer freight was experiencing its heaviest volumes on Monday in Idaho and the Mid-Atlantic states. 

 

Dry van capacity on Monday was tight in areas of Southern California and Houston, Texas where there has been a strong increase in headhaul activity (55.97%) with San Antonio, TX seeing an increase in rejection rates of 5.27%.

Note: Top Map is reefer capacity, bottom map is dry van. (Graphs below courtesy of DAT Market Conditions)

reefer capacity

van capacity

Have a Question? Ask one of our Experts

Do you have specific questions about the freight market in your area? Don't hesitate to ask us. Your sales representative or one of our professional logistics team is ready to help, so give us a call! 800.568.2240, option #2.