We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • ::COVID-19 COVERAGE::
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Dispatches
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Dispatches
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
Home » Surge in spot market traffic drives down truck rates; will contract bids follow suit?
newsworthy

Surge in spot market traffic drives down truck rates; will contract bids follow suit?

March 15, 2017
DC Velocity Staff
No Comments

Will an unexpected surge in demand for non-contract, or "spot" market, truckload freight influence the outlook for contract rates as the industry heads into the traditionally strong spring shipping cycle?

Spot traffic was anything but punk in February, which is normally a slow month. DAT Solutions LLC, a consultancy that provides load board services to the spot market, said total volumes last month rose 48 percent from the same period in 2016. This led an unusual number of contract carriers to shift capacity into the spot market, a common tactic when spot demand spikes.

The influx of supply drove down spot rates for dry van services—the most common form of truck transport—by 5 cents per mile over January, including fuel surcharges, according to DAT. Spot rates for refrigerated traffic fell 9 cents per mile on a sequential basis. Flatbed rates bucked the trend, up 4 cents per mile, due to strength in demand for building materials and heavy machinery used by companies in the construction and energy sectors.

By the last week of February, however, spot rates had increased week over week, and DAT's load-to-truck ratio, which compares the number of available load postings to available trucks, rose sharply, a possible indication capacity had returned to the contract market as contract rates began to firm. The spot market accounts for about 25 to 35 percent of the estimated $400 billion a year U.S. truckload market.

At this point, it is unclear whether enough supply has receded from the spot market to sustain the trend, and what impact it will have on the next contract bidding cycle. Contract rates tend to follow spot market trends, though the contract market lags the spot sector by a number of months.

John G. Larkin, lead transport analyst for investment firm Stifel, said in a note Monday that most shippers are not prepared to accept rate increases. In crisscrossing the country, Larkin said he found that many shippers are giving their carriers a chance to keep their existing lane awards as long as current rates—already at depressed levels—remain flat, or are reduced even further. "In short, the negotiating power still largely resides with shippers and not the carriers," Larkin wrote.

Though shippers are mindful that capacity could be reduced by various factors, including fleet downsizing, a worsening shortage of commercial drivers, and the government's mandate that every truck built after the year 2000 be equipped with electronic logging devices (ELDs) by Dec. 18, they still "press on with strong demands for great service at low or even lower-than-low pricing," Larkin said.

Transportation Trucking Truckload Transportation 3PL
KEYWORDS DAT Stifel Financial Corp.
  • Related Articles

    Truck spot volumes, rates in May hit highest levels since 2015, DAT says

    US Xpress lets loose with 13 percent wage hike for solo drivers; will other truckers follow suit?

    Year-end surge leaves dry van spot truckload rates at highest levels since 2009, consultancy says

Recent Articles by DC Velocity Staff

Global air cargo demand returned to pre-Covid levels in January

Descartes expands customs compliance toolkit with $36 million QuestaWeb acquisition

CMA/CGM to add LNG-powered ships to U.S. service

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Relaxed regulations for drone parcel delivery to take effect in March

  • IBM survey says digitalization trends will sweep trucking industry by 2030

  • Gartner survey signals increased investment in resilience over the next two years

  • Increasing Urgency for Vaccine Supplies Drives Launch of New Vaccine Manufacturing Resources on Thomasnet.com

  • What Level of Automation is Right for Your Warehouse?

Now Playing on DCV-TV

D92f0dd1 a98c 434a 9e17 30b63ee72c90

Automated Pack-out and Print-Apply System for thredUP

DCV-TV 4: Viewer Contributed
SilMan Industries designed and implemented a mixed polybag-carton system, including automated print and apply, in a new regional Fulfillment Center for thredUP, one of the world’s largest online resale platforms for women’s and kids’ apparel, shoes, and accessories. The Situation Secondhand clothing and online...

FEATURED WHITE PAPERS

  • Time to rethink your lift truck power

  • Warehouse Management System Project Toolkit

  • Solving Talent Management Challenges Now and In the Future

  • Shaping Up Last Mile Delivery to Surpass Customer Expectations

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2021. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing