Truckload spot market volumes in May reached their highest level since September 2015, increasing by 7.3 percent over April and 63 percent year over year, load board provider and consultancy DAT Solutions said today.
A steady increase in dry van and refrigerated freight volume, combined with higher rates and load-to-truck ratios—the ratio of available loads to capacity—signal that the industry is leaving a two-year recession "in the rearview mirror," said Mark Montague, industry pricing analyst for Portland, Ore.-based DAT.
Van and refrigerated volumes rose sequentially in May by 16 and 19 percent, respectively, DAT said. This indicates higher demand for trucks to move dry goods and agricultural products before the start of the summer, Montague said.
Flatbed activity slipped 2.4 percent month over month, in line with seasonal norms, DAT said.
Total freight volumes beat prior-year comparisons for the tenth consecutive month, DAT said. Compared to May 2016, van volumes jumped 86 percent, reefers increased 87 percent, and flatbeds added 56 percent.
Volumes were goosed by a rebound from drought conditions in California, which affected van and refrigerated traffic, DAT said. Memphis, a major distribution hub, reported strong van demand.
Not surprisingly given the strong demand, spot rates in the past two weeks have risen for all three equipment types to the highest levels since 2015. Average van rates reached $1.69 per mile, gaining 2 cents compared to April and 15 cents year over year. The reefer rate was $2.02 per mile, an 8-cent increase compared to April and a 13-cent boost compared to May 2016. The flatbed rate was $2.10 per mile, up 3 cents month over month and 8 cents year over year.
Rates firmed in part due to tighter capacity as a result of the shortened Memorial Day holiday week and the federal government's annual three-day roadside safety checks, DAT said. Montague expects van and reefer pricing and volume to be elevated through the Fourth of July weekend, at which time freight activity typically tapers off. Spot rates have been rising since April.
Three consecutive months of spot increases are a likely precursor to higher rates for contract services, which comprise the bulk of truckload traffic. Contract rates usually lag spot rate trends.