June DAT Truckload Volume Index reflects how capacity is not keeping up with demand

Paced by a combination of rising truckload volumes, due largely to high levels of retail imports and peak produce shipments, June spot and contract truckload rates reached a new record, for the June edition of the DAT Truckload Volume Index, which was recently released by DAT Freight & analytics, an online marketplace for spot market truckload freight, tuned in another strong month of performance.

The DAT Truckload Volume Index (TVI) 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.

The June reading for the TVI came in at 237, marking an 11% gain over May, setting a new record, topping May’s 212, which was down 6% compared to April (the previous record), while still marking the fourth highest month on record.

DAT’s data found the following takeaways for truckload volumes, load-to-truck ratios, and rates in June:

• the national average spot truckload van rate on the DAT One load board network, at $2.68 per mile, was off $0.01 from Mary’s all-time high of $2.69;
• the national average spot reefer rate, at $3.10 per mile, was down $0.01 compared to May, topping the $3 per mile mark for the second time, and the national average spot flatbed rate, at $3.15 per mile, saw a $0.03-cent gain over May, also topping the $3 per mile mark for the second time;
• contract truckload rates set records for all three equipment types. The average van rate was $2.73 per mile, up 6 cents compared to May. The contract reefer rate increased 3 cents to $2.88 per mile, while the flatbed rate jumped 7 cents to $3.10 per mile;
• while overall truckload volumes were up in June, the number of loads posted to the DAT One Network was off 6% from May, an indication that volumes moved from the spot market to contract freight or other means; and
• load-to-truck ratios fell for all three equipment types in June, with the national average van ratio, at 5.6, down from May’s 6.1, the reefer ratio, at 11.6, down from May’s 13.0, and flatbed, at 66.8, was off from 97.1

In an interview, DAT Chief of Analytics Ken Adamo told LM that June’s output did not come as a surprise

“Most of the effect of the July 4 [impact] occurs in June, as it builds up at the end of the month., with June also representing the end of the second quarter of the year,” he said. “There is a lot of typical seasonality present. We continue to see capacity not being able to keep up with demand. That really is the story…and leading to these higher than seasonally typical conditions. Frankly, it is higher than what you would expect from a long-term trend perspective.”

Adamo noted that there has not been any major recessionary activity, at all, coming off of these recent high level TVI readings, likening it to a plateau over the first half of 2021, with readings bouncing around all-time highs, with some variance, depending on what is occurring in the market.  

Addressing contract truckload rates, which set new records across the board in June, Adamo explained that spot rates lead contract rates, in what he called a very pronounced relationship.

“It is a function of direction, duration (how long rates are up or down), and magnitude,” he said. “Spot rates have been up for a long time by a large amount so that almost necessarily brings up contract rates. Shippers are trying to move their freight back into the contract market. If you take the rate aspect out of it, they are trying to lower their freight transactions on the contract market and get their routing guides back in shape. The only way for that is for carriers to forgo the very hot spot market and go back to their old contract rates and entice them with increases in their contract rates, whether they are a common carrier or a main carrier in the routing guide.”

What’s more, for the better part of the last year, Adamo said that shippers have been putting in higher and higher contract rates, with the intent of enticing capacity back into the routing guide, which has largely failed, as spot market rates are still high and there has been no enticement back to the contract market.

“If the market is normally 85%-15%, for contract to spot and it goes to 80%-20%, five percent of a trillion dollars is a lot of money,” he said.   

As for July, DAT said that when comparing rates entering the market to those exiting shipper routing guides, contract rates were rising at the beginning of July: new routing guide contract rates increased by 7% in the two weeks ending July 1 compared to the prior two-week period.

“We expect contract rates to remain elevated at least through the fall,” said DAT.