Transportation market update: record demands spur spot market increases

Due to many factors in the transportation industry, demands for trucks of all types have been steadily increasing.  Whether it be the change to mandates of Electronic Data Loggers (EDLs) or driver shortages becoming worse, there are fewer trucks available and more freight that requires transport.
    

According to DAT Solutions, which operates North America’s largest load board marketplace, there has been a 15-month run of spot market increases. The last time there was a sustained driver pricing power was after deregulation. Spot rates have exceeded contract rates as an average in North America for the last 15 months. Compared to June 2017, spot van rates have increased 52 per cent and refrigerated truck rates have surged 58 per cent. Spot rates for refrigerated trucks increased 10 cents alone from May to June to $2.82USD/mile.
    

Freight availability on DAT load boards also set a new record as the DAT North American Freight Index rose 9.3 per cent month over month and increased 18 per cent compared to June 2017. The amount of freight available is growing faster than new drivers are coming into the industry and that is putting a lot of pressure on the price of transport.
    

What can you do to manage this adjustment to the market?

 

1.    Plan ahead as much as you can. If you have freight that can be programmed or even partially programmed, do it. Work with your trusted service providers to have them give you a contracted rate for a certain number of trucks a week; if you can make those loads on regular days, even better. Even if you can program half of the freight this way, it will help keep your pricing more stable than companies playing the market on all the freight.

 

2.    Make relationships with your brokers and carriers. When you do have to cover last minute or use a spot market truck, it’s better to be with someone you trust to give you a fair rate. Building relationships can be as simple as giving them loads year round (if possible) or giving them first crack at other business. They want to grow and keep trucks moving. Whatever you can do to help, will come back around with good carriers.

 

3.    Keep an eye out for the ones that do want to take advantage. These are usually carriers/brokers that you have never heard of but weirdly have a truck when no one else does. There is a reason -- it’s either going to be super expensive and/or terrible service. Sometimes it can even be 
double/triple brokered (brokering a load more than one step from you), which gives you less visibility and control and could cause a big headache.
    

It is clear that the market is adapting and it is unlikely that rates will ever be what they once were. It may even get worse before it gets better, due to the driver population aging out of the industry. How will you be working to build up capacity for you and your 
customers?

 

Publish date: 
Wednesday, August 8, 2018

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