November TVI shows volume progression as rates decline, reports DAT

The November edition of the DAT Truckload Volume Index (TVI), which was recently issued by DAT Freight & Analytics, showed relative strength, paced by volume gains as the month progressed.

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.

November’s TVI dry van freight reading—at 218—fell 9.5% compared to October, while falling 4.4% annually. The October refrigerated (reefer) TVI—at 170—was down 4.5% sequentially and off 5.0% annually. And the flatbed TVI—at 218—was down 11% sequentially and posted a 13% annual gain.   

DAT said that changes in the TVI represent the number of loads moved with a pickup date during the month. And it added that spot truckload rates are negotiated on a per-load basis and paid to the carrier by a freight broker, with DAT’s rate analysis based on $137 billion in annualized freight transactions.

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

• the national average spot van rate was down $0.05, to $2.38 per mile and down $0.55 annually;
• the national average reefer rate dipped $0.01, to $2.80 per mile and down $0.65 annually;
• the national average flatbed rate declined $0.06, to $2.82 per mile and was down $0.24 annually;
• the national average van load-to-truck ratio—at 2.7 (there were 2.7 loads available for every van posted to the DAT One load board network)—represented its lowest tally in a single month going back to May 2020, and was off 1.5 compared to November 2021, with the reefer ratio at 4.9, off from October’s 5.1, and flatbed at 9.3, down from October’s 12.5, and declining for the eighth consecutive month;
• line-haul rates, which subtract an amount equal to an average fuel surcharge, dropped to their lowest levels in almost 2.5 years, with the van line-haul rate down $0.06, to $1.71 per mile, the reefer line-haul rate off $0.02, to $2.07 per mile (its lowest since June 2020, when fuel surcharges averaged $0.19 for van freight and $0.21 for reefer freight), and the line-haul flatbed rate, at $2.02, fell $0.07 compared to October and $0.54 annually (DAT noted that line-haul van and reefer rates have been down each month since January, when they were at $2.70 and $3.15 per-mile, respectively); and
• the national average shipper-to-broker contract van rate was off $0.02 in November, to $3.07, $0.12 above November 2021, with the average contract reefer rate, at $3.37 per mile, off $0.01, and up $0.27 annually, and the average flatbed rate rose $0.03, to $3.65 per mile for a $0.31 annual gain

DAT officials said that the spread between spot and contract rates for van and reefer freight headed up in November, adding that average spot and contract van rates were virtually equal in February. They also observed that while spot rates decreased throughout 2022, contract pricing has been softening going back to the middle of the year.

“There was seasonality in the van and reefer markets around the Thanksgiving holiday, but also a surge in volume in major intermodal ramp markets like Los Angeles, Chicago and Kansas City,” said Ken Adamo, DAT Chief of Analytics, in a statement. “Shippers used the spot market to reduce the risk of disruptions ahead of a potential rail strike. November contract replacement rates—the difference in the rate when one contract ends and another begins—were 12% and 16% lower for vans and reefers, respectively, compared to October. We expect spot and contract pricing to continue a downward trajectory but for the gap to narrow during the first quarter of 2023.”

In a previous interview with LM, Adamo explained that Adamo explained that, on balance, though, the overall shape of things remains relatively in line with expectations, noting that on a day-to-day basis, 2022 is looking very similar to this time in 2018.

Addressing if securing capacity has become less pressing, given the current inventory outlook, Adamo said that it is incorrect to assume that all holiday season inventory is in and where it needs to be. The reason for that, he said, is that things remain selective for certain commodities, especially for goods with longer lead times.

“It's still going to be busier right if you are in and around the retail markets, or if you're in and around the retail space, this is going to be one of your busiest times of the year, no doubt,” he said. “Will it be easier to find a truck this year than the last three years? Absolutely, no doubt about it. Are your contract carriers going to be accepting a much higher percentage of their contracted freight. Absolutely. But I would still expect it to be, and it will be busier than non-peak periods.”

When looking at some of the swings that have occurred over the course of this current freight cycle, Adamo observed that what is happening now is that the market is seeing the amplitude and the frequency of the market, with changes going higher and more frequent, in that peaks have become more pronounced and the dips are getting lower. What’s more, he noted that going back 10 years ago, most industry stakeholders said things were on a 24-month cycle, and then after the 2017-to-2019 period, they said it was more of an 18-month cycle

“It seems to be kind of happening on a more frequent basis,” he said. Twelve- to-18 months seems to be the new norm. But it appears as though spot rates have reached a relative bottom, give or take. When the markets are about to turn, there's always some confusion, some false starts, some question of is it turning, is it not? You're going to see some of that. Contract Rates do still have a way to fall right just given how they lag spot rates, and they certainly have some more time to fall. We're still kind of steadfast in our prediction that spot race will start to march back up in Q1 and Q2 of next year, which will coincide with the bottom of contract rates. And when you look at the bottom over bottom of each of the last few market cycles, you're looking at an 8%-to-9% compound and annual growth rate of contract rates. Which, if you look at GRI [general rate increases] that FedEx and UPS just announced, and you look at any kind of publicly traded trucking companies’ driver pay increases, that all kind of jives with what they're seeing, and it kind of back checks against macroeconomic inflation. So, I think, when you look at all the tea leaves, it's a market that is struggling, but moving towards normalcy in that regard. And if all of that holds we would expect spot rates to essentially bottomed out, be plus or minus ten or so cents.”