July DAT Truckload Volume Index sees seasonal impact in lower rates and volumes

The July edition of the DAT Truckload Volume Index (TVI), which was recently issued by DAT Freight & Analytics saw declines on the heels of growth in some segments in June. 

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, load-to-truck ratios, and rates, for the month of July, including:

• the van TVI was down 7.0% compared to June, to 226, and down 3.0% annually;
• the reefer TVI was down 3.4% compared to June, to 169 and up 1.2% annually (DAT said that even with each TVI reading declining, the reefer and TVI numbers marked the highest on record for July, with fresh and frozen food, metals, machinery, construction materials, and other seasonal freight moved through supply chains);

• the flatbed TVI decreased 12.8% compared to June, to 238, and was up 3.5% annually;

• the spot van rate fell $0.01, to $2.07, down for the fifth time in the last six months, and is off $0.56 annually, with the spot reefer rate off $0.03, to $2.44 per mile, and down $0.60 annually, and the spot flatbed rate down $0.07, to $2.54 per mile, and down $0.72 annually;
• linehaul rates, which DAT said subtract an amount equal to a fuel surcharge, saw July declines, with the van line-haul rate down $0.02 from June, to $1.63 per mile, reefer down $0.05, to $1.96 per mile, and flatbed off $0.09, to $2.01 per mile;
• the average July fuel surcharge rose $0.02 to a $0.44-cent average per mile for van freight, $0.48 for reefers, and $0.53 for flatbeds;
• the national average van load-to-truck ratio was in line with recent months, with van, at 2.6, with 2.6 loads available for every van posted, matching June, and down from 3.8 in July 2022, the reefer ratio, at 3.8, was flat compared to June, and down from 7.2 in July 2022, and the spot flatbed ratio, at 7.1, was off from June’s 9.7 and well below July 2022’s 21.8;
• DAT’s benchmark rates for contracted freight were mixed, with the van rate off $0.01, to $2.57 per mile, the reefer rate up $0.03, to $2.91 per mile, and the flatbed rate up $0.05, to $3.29 per mile; and
• after closing for three straight months, DAT said that the spread between contract and spot rates was flat for van freight and up $0.06 for reefers, and up $0.12 for flatbeds, with DAT saying that the size of the gap is an indicator of bargaining power among shippers, carriers, and brokers

“Shippers faced service disruptions at the ports and in the less-than-truckload sector but were able to secure van capacity without causing the needle to move on spot rates and volumes,” said Ken Adamo, DAT Chief of Analytics, in a statement. “Spot rates, as a reminder, are ‘all-in’ rates, meaning no separate fuel surcharge to help mitigate the risk of fuel price fluctuations. You have to negotiate each individual load with fuel and operating costs in mind, which is not always easy. The sudden increase in fuel prices is testing the wherewithal of small carriers at a time when freight volumes are in a seasonal lull.”

In an interview with LM, Adamo explained that there typically is a lull in freight activity following the fourth of July, which is reflected in end of month and end of quarter data, noting that July represents what he called a tale of two months, in that things start very strong and subsequently slows down. And he added that the first half of August is similar, with no real readings regarding Peak Season activity until the second half of the month or even into early September, depending on where the calendar falls or what is going on in the freight market.

“July went about as expected,” he said. “The only thing that threw it for a loop was the fuel prices going up, and we would have had a stronger month, had the fuel prices not went haywire.”

As for the current capacity situation, while it remains a negative, it does not come as a surprise, and is within expectations.

“Unfortunately, what was expected was a very 2019-type shape, which is it just drags on into the fall,” he said. “I think a lot a lot of folks were hoping maybe for a surprise where fourth of July, volumes were strong this year and that end of Q2 volumes were strong at elevated rates. They were maybe hoping that would have hung on, and we're just not seeing that. We're seeing pretty a carbon copy of other similar years on record. It's pretty much exactly what's happening right now. I think, maybe, there was some wishful thinking out there that on the carrier and broker side that things would turn up. But by and large that hasn't happened. Across the board, in almost all the big earnings releases, when shippers are talking about this, their eyeballs are faced forward on what's coming, and I think most of them, if not all of them, are saying we're almost through this. We are actually starting to actively prepare for when the market goes back into its upside.”

From a rate and pricing perspective, Adamo explained that this point of the year is the most precarious time to price or make investments.

As an example, he observed that the person who priced the contracts for brokers and carriers at the peak of the market, like February 2021, would have been viewed as “Employee of the Year,” and been so for the following 18 months or so.

“The reason for that is you price, to a point, and then the market falls 30%, and that person is a hero,” he said. “This is the absolute hardest time to price because you know the market is—over the course of a 12-month contract—going to go up. But you don't know when and you don't necessarily know precisely by how much. Frankly, I think a lot of what you're seeing coming out from large public carriers and brokers is posturing to get the message to shippers that ‘hey, we're going give you a higher price now even though current market dynamics don't support it because we know the market is going to go back up.”