DAT: Truckload volumes and rates diverged in August

Rhea-AI Summary

DAT Freight & Analytics reports divergent trends in truckload freight for August 2024. The DAT Truckload Volume Index (TVI) increased across all equipment types: van TVI up 2.8%, refrigerated TVI up 4.3%, and flatbed TVI up 0.3% month-over-month. Year-over-year, van and reefer TVI showed growth, while flatbed slightly declined.

Despite volume increases, truckload rates declined for both spot and contract markets. National average spot rates decreased for all equipment types, with van rates down 5 cents to $2.01 per mile. Contract rates also dropped, continuing a year-over-year negative trend since August 2022. Linehaul rates showed slight year-over-year improvements but remain challenging for truckers.

Load-to-truck ratios decreased across all categories, indicating a shift in the supply-demand balance in the truckload market.

Positive

• Truckload Volume Index (TVI) increased for all equipment types in August
• Van TVI up 6.3% and reefer TVI up 17.6% year-over-year
• Linehaul rates were year-over-year positive for the first time since March 2022

Negative

• National average spot truckload rates declined for all equipment types
• Contract rates dropped and have been year-over-year negative since August 2022
• Load-to-truck ratios fell, indicating potential oversupply in the market
• August lived up to its reputation as a tough month for truckload rates

Insights

Financial Analyst

The divergence between truckload volumes and rates in August presents a complex picture for the trucking industry. While the DAT Truckload Volume Index (TVI) showed increases across all equipment types, particularly strong in refrigerated freight (17.6% year-over-year), rates continued to decline. This paradox suggests overcapacity in the market, with supply outpacing demand despite higher volumes.

The first year-over-year positive linehaul rates since March 2022 is a glimmer of hope, but the persistent decline in spot and contract rates indicates ongoing pricing pressure. With 85% of truckload freight moving under contracts, the negative year-over-year contract rates since August 2022 highlight the prolonged challenges for carriers' profitability. Investors should watch for potential industry consolidation and the financial health of smaller carriers in this competitive pricing environment.

Market Research Analyst

The August data reveals intriguing market dynamics. The increase in the Truckload Volume Index across all equipment types, especially the 17.6% year-over-year jump in refrigerated freight, suggests growing economic activity. However, the declining load-to-truck ratios indicate an oversupply of trucks relative to available loads, explaining the downward pressure on rates.

The divergence between volumes and rates points to a highly competitive market where carriers are potentially sacrificing margins to secure loads. This situation could lead to a market correction, either through capacity reduction or increased demand. The upcoming fall shipping season will be important in determining if the positive year-over-year linehaul rate trend continues, potentially signaling a shift towards a more balanced market.

Logistics Expert

The August data highlights a critical imbalance in the truckload market. Despite increased shipping volumes, particularly in refrigerated freight, the industry faces persistent pricing challenges. The decline in load-to-truck ratios across all equipment types suggests an oversaturated market, with too many trucks chasing available loads.

This scenario is particularly concerning for smaller carriers and owner-operators who may struggle to maintain profitability in a low-rate environment. The industry might see a shift towards consolidation or diversification of services to weather this challenging period. Additionally, the divergence between spot and contract rates indicates potential opportunities for shippers to renegotiate contracts, while carriers may need to focus on operational efficiency and cost management to maintain margins in this competitive landscape.

BEAVERTON, Ore.--(BUSINESS WIRE)-- Truckload freight volumes and rates continued on divergent paths in August, with shipments rising and prices falling for the third straight month, said DAT Freight & Analytics, which operates the DAT One freight marketplace and DAT iQ data analytics service.

Truckload volumes and rates diverged in August (Graphic: DAT Freight & Analytics)

The DAT Truckload Volume Index (TVI), an indicator of loads moved in a given month, increased for all three equipment types in August:

• Van TVI: 289, up 2.8% month over month
• Refrigerated TVI: 220, up 4.3%
• Flatbed TVI: 287, up 0.3%

The TVI was higher for both van and refrigerated (“reefer”) freight compared to August 2023. The van TVI was up 6.3%, while the reefer TVI was up 17.6%. The flatbed TVI dipped 0.7% year over year.

Meanwhile, August lived up to its reputation as a tough month for truckload rates.

“Linehaul rates were year-over-year positive for the first time since March 2022, a trend that should continue into the fall shipping season,” said Ken Adamo, DAT Chief of Analytics. “However, year-over-year comparisons are little consolation for truckers looking for better pricing now.”

Spot and contract rates declined in August
National average spot truckload rates declined for all three equipment types compared to July:

• Spot van: $2.01 per mile, down 5 cents
• Spot reefer: $2.41 a mile, down 4 cents
• Spot flatbed: $2.41 a mile, down 7 cents

The average van linehaul rate was $1.60 a mile, down 3 cents month over month but 3 cents higher than August 2023. The reefer rate fell 2 cents to $1.96, 1 cent higher year over year. The flatbed rate tumbled 5 cents to $1.92, still 2 cents higher year over year. Linehaul rates subtract an amount equal to an average fuel surcharge.

National average rates for freight moving under long-term contracts also dropped compared to July:

• Contract van rate: $2.40 per mile, down 3 cents
• Contract reefer rate: $2.74 a mile, down 7 cents
• Contract flatbed rate: $3.08 a mile, down 3 cents

Monthly average contract rates for all three equipment types have been year-over-year negative since August 2022, reinforcing the protracted pricing challenges of truckload carriers. Approximately 85% of all truckload freight moves under contract.

Load-to-truck ratios fell
National average load-to-truck ratios turned lower for all three equipment types:

• Van ratio: 3.6, down from 4.2 in July, meaning there were 3.6 loads for every van truck on the DAT One marketplace
• Reefer ratio: 6.0, down from 6.5
• Flatbed ratio: 9.8, down from 11.9

Load-to-truck ratios reflect truckload supply and demand on the DAT One marketplace and indicate the pricing environment for spot truckload freight.

About the DAT Truckload Volume Index
The DAT Truckload Volume Index reflects the change in the number of loads with a pickup date during that month. A baseline of 100 equals the number of loads moved in January 2015, as recorded in DAT RateView, a truckload pricing database and analysis tool with rates paid on an average of 3 million loads per month.

DAT benchmark spot rates are derived from invoice data for hauls of 250 miles or more with a pickup date during the month reported. Linehaul rates subtract an amount equal to an average fuel surcharge.

About DAT Freight & Analytics
DAT Freight & Analytics operates the largest truckload freight marketplace and truckload freight data analytics service in North America. Shippers, transportation brokers, carriers, news organizations, and industry analysts rely on DAT for market trends and data insights based on more than 400 million annual freight matches and a database of $150 billion in annual freight market transactions.

Founded in 1978, DAT is a business unit of Roper Technologies (Nasdaq: ROP), a constituent of the Nasdaq 100, S&P 500, and Fortune 1000. DAT is headquartered in Beaverton, Oregon.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240918363926/en/

DAT Contact

Annabel Reeves

PR@dat.com / annabel.reeves@dat.com; 503-501-0143

Source: DAT Freight & Analytics

FAQ

How did truckload volumes change in August 2024 according to DAT Freight & Analytics?

According to DAT Freight & Analytics, truckload volumes increased in August 2024. The DAT Truckload Volume Index (TVI) rose for all equipment types: van TVI up 2.8%, refrigerated TVI up 4.3%, and flatbed TVI up 0.3% month-over-month.

What happened to truckload rates in August 2024?

Truckload rates declined in August 2024. National average spot rates decreased for all equipment types, with van rates down 5 cents to $2.01 per mile. Contract rates also dropped, continuing a year-over-year negative trend that began in August 2022.

How did load-to-truck ratios change in August 2024?

Load-to-truck ratios fell in August 2024 for all equipment types. The van ratio decreased from 4.2 to 3.6, the reefer ratio from 6.5 to 6.0, and the flatbed ratio from 11.9 to 9.8, indicating a shift in the supply-demand balance in the truckload market.

What was the year-over-year performance of the Truckload Volume Index (TVI) in August 2024?

Year-over-year, the van TVI was up 6.3%, and the reefer TVI was up 17.6% in August 2024. However, the flatbed TVI dipped 0.7% compared to August 2023.