‘Urgent restocking’ continues to boost truckload spot rates and loads, reports DAT

Spot market load volumes and rates for van and reefer equipment saw mostly significant gains, for the week of March 16-March 22, brought on by urgent orders, or restocking of retail goods, due to the ongoing coronavirus pandemic, according to data issued by Portland, Oregon-based freight marketplace platform and information provider DAT, a subsidiary of Roper Technologies.

The firm explained that this is being driven by an ongoing pattern that is seeing “anxious shoppers [buying] as much as they can on each trip,” adding that “retailers, including e-commerce outlets, reply increasingly on spot market providers to re-stock shelves at a moment’s notice, while truckers report long wait times at pickup and delivery points.”

For the week of March 16-March 22, DAT reported the following annual differences:

• spot load posts are up 4.6%;
• spot truck posts are up 2.4%;
• van load-to-truck ratio is up 11.4%;
• van spot rates are up 5.6%;
• flatbed load-to-truck ratio is down 16.2%;
• flatbed spot rates are up 0.8%;
• refrigerated (reefer) load-to-truck ratio is up 26.1%; and
• reefer spot rates are up 7.5%

In a recent interview with LM, Ken Adamo, Chief of Analytics at DAT, said that national dry van spot market rates were currently up 5%-to-7% (as of March 18) through mid-month, which he called a substantial increase, given where things are seasonally from an overall rate climate perspective, and are not showing any signs of letting up from an empirical perspective either.

Other contributing factors he cited included declining diesel prices and a 3.15-to-1 load-to-truck ratio (as of March 15).

“2020 is kind of closely following 2017 as a way for us to model things off of a prior year,” he said. “In the past three weeks, things have fundamentally decoupled from 2017 and shot upward. The differences between 2017 and 2018 are with 2018 arguably being the high water mark of the decade. We are not there yet, but we are maybe halfway there. The next couple of weeks will be important to watch, but what we are seeing is that will mainly be driven by load volume, and the past week was a near vertical spike in load volume for posted loads in our network and our extended network.  The working thesis is that capacity has not left the market but is being sucked up by large contract truckload shippers and are not using the spot market.”

Addressing the current load-to-truck ratio, Adamo said that it is decoupled from 2017 and operating in a space that is significantly higher than 2019 and setting its sights on 2018 levels.

“There is still a way to go, with the coming weeks being imperative, as spring shipping and produce for reefers with produce season, so we could see a compounding effect here in the next couple weeks for load-to-truck ratios,” he said. “What is happening there is apparent on the rate side, where we are seeing unmitigated increases.”

When asked about reduced consumer demand due to the coronavirus, Adamo said that in the short term the spot market is going to be inundated over the next two weeks at least, with issues relating to getting consumer goods, like paper products, to warehouses and distribution centers.

“There is enough backlog to keep carriers busy for the next two weeks,” he said. “There is also this midterm horizon in the early summer, which is in the middle of produce season. And things like Xboxes are going to start coming across the ocean mid-summer. There are all these traditional transportation fence posts we are watching, with a focus on if coronavirus is going to bleed into Peak Season and Black Friday later this year.”

Looking ahead, when people have been quarantined for 30-plus days, Adamo said it is very unclear as to where things will stand for carriers, shippers, and brokers, calling it a hard question to answer.

“What happens between now and produce season is concerning to me,” he said. “We are kind of on the foothills of it now. We are also suffering from the reaction to trade tensions with China about a year ago, when manufacturers and retailers buffered their inventories to prepare for potential trade disruptions, which led to there being a lot of inventory to draw down from. That leads to a question of what happens to all of this freight that is backlogged that is going to land in West Coast ports in 30-45 days?”