DAT Truckload Volume Index trends down in February

Coming off a strong January, which saw new records set, truckload spot market activity was strong, but not at the same levels in February, according to the new edition of the DAT Truckload Volume Index (TVI), which was issued this week 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.

February’s reading—at 227—was down 3% compared to January’s 229, which marked the highest-ever TVI reading in January. And while load-posting activity was off sequentially, the number of loads posted to the DAT One load board network saw a solid 24.1% annual increase.

DAT’s data highlighted the following takeaways for truckload volumes, load-to-truck ratios, and rates, for the month of February, including:

• the national average spot rate, for van freight, at $3.10 per mile, was off $0.01 compared to January;
• the national average spot reefer rate, at $3.53 per mile, was down $0.06 compared to January;
• the national average spot flatbed rate, at $2.87 per mile, saw a $0.01-cent gain;
• the national average van load-to-truck ration fell to 7.3 off of January’s 9.3;
• the reefer load-to-truck ratio, at 13.7, was down from January’s 20.4, with the flatbed ratio coming in at 83.9, below January’s 86.7;
• the average van freight contract rate saw a $0.10 increase, to $3.09 per mile, rising for the last 21 months and reaching the $3 mark for the first time (and rising for the 21st consecutive month), with the average contract reefer rate up $0.09, to $3.25 per mile, and the average flatbed contract rate up $0.09, to $3.43 per mile, with DAT saying that higher contract rates were a driver for lower spot market volumes; and
• the national average fuel surcharge for spot van freight, at $0.46 per mile, hit its highest February level since 2014, rising $0.19 annually, with the average price of diesel fuel seeing a nearly $0.75-cent gain, to $4.85 per gallon, from February 27-March 6, and the average fuel surcharge for spot van freight going from $0.45 to nearly $0.60 per mile, for the same period

“Spot market rates and volumes naturally decline in February as more truckload freight moves under contract,” said Ken Adamo, DAT Chief of Analytics, in a statement. “Volatile diesel fuel prices have given the market a jolt, and shippers and carriers are reviewing their playbooks for ways to reduce empty miles and improve fuel efficiency.”

In an interview with LM, Adamo said that February saw more spillover demand that what is typically expected on a seasonal basis, due to things being slower and, in turn, elongating the return period, as it took longer to process that amount of freight, which usually only stretches into mid-January.

“It makes total sense that it stretched into February,” he said. “There was more e-commerce and more returns. But around mid-February we started to see some softening in the market, for sure. We could not tell if it was seasonality or a wholesale softening so we were watching that very closely, and the Russia-Ukraine conflict started, subsequently bringing fuel challenges.”

This led to a situation where “all-in” rates do not tell the full story, explained Adamo.

“Most fuel surcharges are based off a six-and-a-half mile per gallon peg, with most shippers and large carriers and DAT’s ‘example’ fuel surcharge, which we bake into our rates, is based off of 6.5 miles-per-gallon, for a $0.15 increase per mile,” he said.  

When asked how March may end up, Adamo said it is reasonable to expect a complete and total reversal compared to February.

“The wind has come out of the spot market’s sales, there is no other way to put it,” he said. We are looking at the load-to-truck ratio on a daily basis, and it is approaching 4.1. We expect things to start picking up in mid-March, for things like patio furniture, grills and things like that which need to get to retailers. For reefers, you would expect produce to start picking up. These fuel disruptions push freight back to the contract market.”

And that is being pushed by many truckload carriers fielding more calls from applicants about becoming company drivers and also driver maxing out their fuel cards and looking for ways to mitigate that.

It talks with its factoring partners, DAT is seeing record numbers of factored loads on a week-o-week basis, according to Adamo.

“If you cannot afford the fuel, you need that base right now, so you are willing to take a cut on that to factor it, to get the money in your pocket,” he said. “Most of the optimism we saw earlier in the year has waned.

What’s more, Adamo said that this is the first time in two years that spot [rates] is substantially below that of contract.

“If you normalize out fuel, it is way below contract,” he said. “Take a $1,000 load you moved in February, for the same lane, customer, and freight. “Say, you move that load for $1,000 on the spot market in March, you are paying roughly 50% more in fuel. If you moved that load in February for $1,000….and on your income statement as a trucker, you incur $200 in fuel costs and the remaining $800 for your salary and truck payment. In March, you are probably only getting $700 or less to offset those expenses, depending on where you are hauling, because maybe only $300-to-$350 is going to fuel. This is directly eroding truckers’ bottom lines.”

Trucks are running at about 25% of fuel as a percentage of their total revenue, which Adamo said is very healthy, but once it gets to around 30%-to-32%, is when truck bankruptcies start to see a huge uptick.

“Right now, depending on what part of the country you are in or how you are running long-haul and short-haul, it could be approaching close to 40%,” he said.