‘Seasonality,’ signs of normalcy, return to rollicking trucking market

There are signs of normalcy returning after three years of turbulence in the $830 billion trucking market.

Recovering from chaotic conditions caused by pandemic-driven economic shutdowns and uneven supply chains nationally and around the world, top trucking executives are breathing sighs of relief—while keeping their fingers crossed.

“The unbridled chaos we’ve been dealing with for almost three years is moderating,” Schneider CEO and President Mark Rourke told LM. The Green Bay, Wis.-based carrier operates the fifth-largest truckload operation and is a huge intermodal operator in North America.

Trucking analysts agreed. “The truckload market is easing back to normal levels of growth,” Avery Vise, vice president of trucking for Indianapolis-based truck research firm FTR, told LM. “I expect spot rates to keep declining. Contract rates will start easing after the fourth quarter. We don’t see a lot of risk.”

Rourke cited a “series of actions” within the truckload market for resetting TL rates into a more normal state.

One was the move by shippers out of the “spot,” or transactional, market and into longer-term contract rates.

DAT, which operates the largest truckload freight marketplace in North America and provides its DAT iQ data analytics service, noted its July Truckload Volume Index (TVI) for dry van freight was down 20% compared to June.

The total number of spot loads posted to the DAT site have plummeted. One load board network fell 26% compared to June and fell 34% year over year. The number of trucks on the network fell 9.3% month over month but was 8.1% higher compared to July 2021.

Year over year, DAT’s van TVI was down 17% and equal to July 2020. The reefer TVI was 7.1% lower compared to July 2021 and 1.9% less than July 2020. The flatbed TVI was 13.6% higher than July 2021 and up 16% compared to July 2020.

After gaining $1.15 since July 2020, the national average rate to move van freight under contract crested and fell to $3.21 per mile, down 8 cents compared to June. (The contract rate for reefers fell 6 cents to $3.50 a mile and the flatbed rate dropped 8 cents to $3.83 a mile, DAT noted).

“Demand for van and reefer services softened predictably in July and freight volumes generally settled to levels seen in July 2020 and 2019,” Ken Adamo, DAT chief of analytics, said in a statement “After several years of volatility, truckload volumes for van and reefer freight followed a more typical summertime pattern,” Adamo said.

That brings up the other stabilizing force in trucking rates – seasonality. That is, the regular ups-and-downs of the annual trucking marketplace. It usually begins in earnest with upticks in March and April, builds into the summer, peaks in September and October, and falls off sharply after Thanksgiving and the holiday shipping season.

“We haven’t had seasonality in two or three years,” Schneider’s Rourke explained. “There’s a sense of normalcy. Demand is quite healthy. It feels like 2018 and 2019 again. It’s more normal.”

Even so, Rourke explained, the truckload sector could help itself with a bit more productivity. Not in terms of trying to obtain longer or heavier trucks, he emphasized. But in terms of using existing equipment and infrastructure smarter and more efficiently.

“Where the industry could help itself is through greater asset productivity,” Rourke explained. “Whether it’s dwell times or overcrowding at the rail yards, things are choppy at best. Our view is we could really drive some improvements if we got some productivity back to the industry. Getting as much new equipment as we need is still an issue.”

Schneider hauls 19,318 loads per day, according to the company. It has 11,650 company drivers, 10,120 company trucks and 33,830 trailers.

Rourke said Schneider could buy 20% more trucks than it actually has been able to this year due to issues with supply chains at original equipment manufacturers.

“We’re taking what they can allocate and what they can build,” he said. “It’s a bit of whack-a-mole. One month they same they’re short of brake chambers. The next month it’s wire harnesses. It’s highly disruptive.”