DAT Truckload Volume Index sees gains in December to end a ‘lackluster’ 2023

The December edition of the DAT Truckload Volume Index (TVI), which was recently issued by DAT Freight & Analytics, highlighted what the company described as the most significant narrowing in the gap between spot and contract van rates, going back to March 2022, a period when truckload prices nearly were at their highest point ever.

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.

The DAT Truckload Volume Index reflects the change in the number of loads with a pickup date DAT’s data highlighted the following takeaways for truckload volumes, load-to-truck ratios, and rates, for the month of December, including:

• the van TVI was down 8.7% compared to November, at 221, and down 2.6% annually;
• the reefer TVI was down 5.7% compared to November, at 182 and down 1.6% annually;
• the flatbed TVI was down 14.7% compared to November, at 203, and up 3.6% annually;
• the DAT broker-to-carrier benchmark spot van rate rose $0.03, from November to December, to $2.10 per mile, for its sixth increase in the last 11 months, with the reefer rate down $0.02, to $2.47 per mile, and the flatbed rate down $0.02, to $2.41 per mile;
• spot linehaul rates, which DAT said subtract an amount equal to a fuel surcharge, saw gains for the second consecutive month in December after five months of declines, with the van line-haul rate up $0.07 from November, to $1.65 per mile, reefer up $0.04, to $1.98 per mile, and flatbed up $0.04., to $1.83 (DAT observed last month that November’s rates topped November 2019 prior to the pandemic-driven supply chain disruptions, with rates, at that time, for van, reefer, and flatbed, at $1.52, $1.85, and $1.74, respectively);
• the contract van rate, at $2.49 per mile, fell $0.04, marking its lowest rate since February 2021, the contract reefer rate, at $2.88 per mile, fell $0.06, and the contract flatbed rate, at $3.14, fell $0.03; and  
• the national average van load-to-truck ratio, at 1.9, was below November’s 2.1 and December 2022’s 3.4 reading, the reefer ratio, at 3.4, was down from November’s 4.4 reading, and December 2022’s 5.7 reading; and
• the flatbed ratio, at 5.1, was off from November’s 5.9 and November2022’s 9.8 reading

“At 39 cents, the spread between spot and contract van rates is still substantial but was down 7 cents compared to November,” said DAT Chief of Analytics Ken Adamo in a statement. “The price to move van freight under contract hit its lowest point in nearly three years. Entering 2024, shippers are in a strong position as they negotiate contract rates, and carriers on the spot market have some optimism that the market will turn. Lower van freight volumes suggest that shippers drew from inventory ahead of the holidays. Disappointing freight volumes and less demand for over-the-road truckload services tempered the bump in spot rates.”

DAT also observed that a convergence of spot and contract rates would signal an end to the current cycle of falling prices for truckload services.

In an interview with LM, Adamo said labeled the December data as equal parts seasonal and disappointing, explaining there was some seasonal upward pressure, as was expected at the end of the year, which was basically identical to how 2019, the last full-year before the pandemic, finished up.

“There were a ton of parallels [to 2019] when you normalize out the effects of fuel,” he said. “The year ended on an upswing, but a pretty lackluster upswing to round out what was a pretty lackluster year.”

Early into 2024, Adamo said overall market conditions are a little bit better than expected due to recent weather events.

“I think we are seeing some strength into the New Year because of that, and it is not a Polar Vortex like 2021, when major amounts of snow essentially crippled the grid in Texas and things like that,” he said. “My expectation is that things will slow down in the coming weeks. We are also hearing a lot of anecdotal evidence that things could very likely see a decent pickup when we get into the spring.”

Looking at the narrowing of spot and contract rates to its narrowest point in nearly two years, Adamo noted that the seasonal pressure on the spot market side is not seasonal, in the sense of weather seasons or calendar seasons as they go into place.

As an example, he observed that bids that are won between August and October take a while to get loaded up into a shippers’ system for a December 1 or January 1 effective date.

“Shippers more and more move into that December 1 because nobody is around to ‘hit go’ in their system,” he said. “What you see is contract rates tick down, because new rates are coming into the routing guide and spot rates go up because of seasonality. It will be really interesting to see if that gap persists into the year or if we don’t see a backslide.”