June DAT Truckload Volume Index trends up

Coming off of three consecutive months of declines, the June edition of the DAT Truckload Volume Index (TVI), which was issued this week by DAT Freight & Analytics, showed growth.

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.

June’s TVI dry van freight reading—at 240—was up 6% compared to May, with the refrigerated TVI—at 173—down 0.6%, and the flatbed TVI up 5%, to 245. DAT said that changes in the TVI represent the number of loads moved with a pickup date during the month.

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

• the average rate, for van freight under contract, hit a new high, at $3.29 per mile, setting a new record;
• the average flatbed rate, at $3.90 per mile, also hit a new high;
• the average contract reefer rate, at $3.56 per mile, was flat;
• the national average spot market van rate decreased $0.01, to $2.68 per mile;
• the national average spot reefer rate, at $3.04, decreased $0.02;
• the national average flatbed rate, at $3.46 per mile, rose $0.02, setting a new record;
• spot rate surcharges, which DAT said are negotiated by the carrier and freight broker as one-time transactions and should incorporate an amount to help cover the carrier’s fuel expense based on diesel prices at the time, hit record highs in June, with van freight at $0.75 per mile; reefers at $0.90 per mile, and flatbed freight at $0.90 per mile (removing an amount equal to an average fuel surcharge, DAT said that the spot van linehaul rate came in at $1.93 per mile, with reefer and flatbed, at $2.22 and $2.56, respectively)
• on an annual basis, the average spot van rate was flat, with reefer down $0.06 and flatbed up $0.31, with the caveat that June 2021 national average for fuel was at $3.29 per gallon compared to $5.75 for June 22;
• spot load posting activity, for the number of loads posted to the DAT One load board network, fell 20% compared to May and were down 26% annually, while capacity outpaced demand, as there were 7% more trucks on the network, from May to June; and
• the national average van load-to-truck ratio rose from 4.4 in May to 3.9 in June, with the reefer ratio falling from 7.5 in May to 7.0 in June, and the flatbed ratio falling from 63.3 in May to 37.6 in June

“Downward pressure on spot rates in June was driven by a combination of high fuel prices and a record number of trucks available for work,” said Ken Adamo, DAT’s Chief of Analytics, in a statement. “While small trucking companies and independent operators are exiting the market, it’s not for a lack of freight. Overall truckload volumes were strong in June as they were throughout the second quarter and now into the first half of July.”

DAT Principal Analyst Dean Croke told LM that June presented a situation, for contract rates, which had not been seen since May 2020, in that in that the new rates in routing guides based on RFPs a few months ago are starting to show up in routing guides, and, for the first time since May 2020, van and reefer contract rates have turned negative.

“That means contract rates have peaked and started to decrease, with the new rates coming in are coming in at a lower rate now, more so in reefer,” explained Croke. “And what that means is overall all active rates in routing guides will start to decrease slowly, which is exactly what happens when spot rates fall as they have. It puts a drag on contract rates eventually. That is a pretty big news story in and of itself, because we had six-to-eight quarters of fairly significant rate increases on the shipper side and this is the first time that has started to back off….and we have seen a lot of shippers re-bid lanes, which is pretty typical of this sort of market cycle, when capacity loosens.”

What’s more, Croke added that the difference this time is a lot of those small low-volume lanes shippers are letting go to the spot market—rather than put into a tender—and they are really focusing on their core lanes. And he added that anecdotally, around 80% of shipper volume runs in 10% of their lanes in general.

“If you are putting out a bid, a lot of people put out 100% of their lanes and tie up carrier time and time trying to get RFPs done,” he said. “That is big picture there but when you look at some of the broader economic indicators, like the ATA’s monthly Truck Tonnage Index and the U.S. Bank Freight Index, they are up annually and even a little bit better than 2018. Our takeaway from the spot and contract market is demand looks a lot like 2018 did, or slightly better, but explaining the decline in rates on the linehaul side when you take out fuel, there is a lot of capacity…and that capacity when you look at load post volumes is almost identical to 2019, which was a bad year for carriers.”

Addressing fuel, Adamo observed that there is still a lot of room for diesel prices to come down.

“In a lot of parts of the U.S., there is a $2 spread between gas and diesel right now,” he said. “And if you look at a lot of the long-term crude versus diesel price, the way it is correlated there is still a lot of room for diesel to come down over the next month or two, with EIA having it around the $4.25 range by Christmas.”