DAT’s April Truckload Volume Index heads down in April while still posting solid results

Following two straight months of records, in February and March, the April edition of the DAT Truckload Volume Index, which was recently issued by DAT Freight & analytics, an online marketplace for spot market truckload freight, trended down but still was strong.  

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.

Coming off of March, which was the highest monthly output ever, April was the second-highest, even with the sequential decline, coming in at 225, a 5% decline compared to March. And the April TVI was up 39% compared to April 2020 and was up 26% compared to April 2019, with Ken Adamo, DAT Chief of Analytics, observing that it is not unusual to see a March to April decline, as truckload freight activity staying at historic highs compared to past years, coupled with unusually strong demand for truckload capacity in April, with motor carriers still holding the upper hand, when it comes to pricing.

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

• the national average spot truckload van rate, at $2.59, was down 8 cents compared to March but still the second-highest monthly average van rate on record;
• the national average spot reefer rate, at $2.93 per mile, was down 2 cents compared to March, and the national average spot flatbed rate, at $2.96 per mile, saw an $0.18-cent gain over March
• the average contract van rate, at $2.66 per mile, rose for the 12th consecutive month;
• the average contract rate for reefer freight, at $2.78 per mile, was $0.15 below the average spot reefer rate;
• the national average contract rate for flatbed equipment, at $2.96 per mile, was up $1.03 compared to April 2020; and
• the spot market flatbed load-to-truck ratio came in at 95.7, equating to more than 95 loads posted for every available truck in April

In an interview, Adamo said that April essentially was a month that he called placid, with rates for dry van and reefer trying to find their place.

“I still see some difficulties largely related to some of the semiconductors, resins, and plastics of some key industries like automotive manufacturing and some of the consumer durables like appliances and things like that,” he said.
“Where we have not seen as much friction is in flatbed. One reason for that is those loads are kind of negotiated as a total price. If you are shipping three coils of steel, it is a B2B transaction…with inflated shipping costs largely passed along to the shipper buying that load of steel, whereas if you have a shipment of flat screen TVs, it is a lot harder, as there is not as much flexibility in that price.”

Adamo observed that if March was viewed as “wild,” due to the Polar Vortex, with that disruption taking a while to settle down, April was more uneventful, by comparison, with the same holding true, when comparing April to May so far, too, with May being impacted by the timing of Road Check, the Colonial Pipeline cyber attack, and a faulty bridge in Memphis.

Despite the decline from March to April, Adamo explained that, by no means, does that indicate there is a scarcity of activity in the marketplace.

Using the ocean market as an example, he said activity is well ahead of last year’s pace, for the same time period, although there are still some signs of things letting up there, as that elevated rate of activity is not sustainable, as well as some throughput coming back, with things still tight in the intermodal ocean markets but not to the extent it previously was.

“On an anecdotal basis, in talking with large asset-based [motor] carriers, some are already midway through implementing their second driver wage increase in the last year, with some maybe starting to talk about a third, as we head into the fall to get peak capacity on the road,” he said. “It may be from a contractual increase but it is a short-term spin for incentives to stay out. Many drivers at large carriers are being offered incentives to stay out on the road.”

Taking that in a separate but related direction, Adamo said there are ways for carriers to add capacity without adding trucks and drivers through things like adding hours and availability, adding that is why Road Check caused such a blip.

“That took the most valuable thing in the capacity pool, which is hours, and chopped them down, whether it was voluntarily or drivers being hung up at the inspections themselves,” he said.

With both spot and contract rates high, Adamo said that with price exploration shippers are typically trying to find a bottom.

“If you talk to enough shippers, they will tell you that they are just trying to find a price in which they can get that handshake to get a contract in place to find some stability among their carrier base,” he said. “They are really just trying to get rates in place for which they feel reasonably confident can stick for three, six, or maybe even nine months and hoping to get some relief ahead of peak.”

On a year-to-date basis, Adamo described current market conditions as extremely strong roughly 1.25 quarters into the year, with the second quarter terminating around the inflection point of a typical rate cycle, where things slow down after the July 4 holiday, in advance of shippers gearing up for the fall peak and back to school activity.

“I think the story of the first half of the year is pretty much written at this point,” he said. “It is going to be very strong. My guess is that it will probably set every first half record we have ever seen for the spot market. In 2020, all of the activity pretty much happened in the second half of the year, starting over the summer, when stimulus checks started coming and people made investments into durable stuff like exercise equipment.”

As for the second half of the year, he said more needs to be determined such as how the tropical season goes, growing escalation in the Middle East as it relates to diesel prices, and what the retail shipping season is going to look like, among others.