DAT says spot market activity dips in January from December while posting annual gains

While finishing 2016 in solid fashion in December, truckload spot market activity in January followed traditional season patterns, coming slow out of the gate following the holiday season, according to data issued by DAT, a subsidiary of Roper Industries.

The DAT North American Freight Index fell 2.5 percent in January, following an 8 percent December increase, snapping a six-month stretch of gains. But even though the post-holiday drop-off remained in effect, January truckload spot market activity was up 56 percent annually.  DAT defines the North American Freight Index as a measure of conditions on the spot truckload freight market.

DAT said that spot, van, refrigerated, and flatbed rates in January saw annual gains, but they were quelled by increases in capacity from contract carriers into the spot market, specifically on high-traffic lanes, which, in turn, lowered rates sequentially.

And January spot market van freight volume dropped 9 percent compared to December and was up 63 percent annually, with the national average rate for vans at $1.68 per mile, including a fuel surcharge, which was 3 cents below December and up 2 cents annually.

For specific spot market sectors, DAT reported the following:

• Refrigerated freight available loads fell 8 percent from December to January and was up 57 percent annually, with available capacity up 1 percent;
• The national average spot rate for refrigerated freight was $1.96 per mile, including a fuel surcharge, which was 3 cents below December and up 6 cents annually;
• Flatbed truck demand headed up 18 percent from December to January and was up 64 percent annually, with available capacity up 3 percent; and
• The national average flatbed rate at $1.91 per mile was down 5 cents compared to December and up 3 cents annually

DAT Director of Marketing Ken Harper wrote in a blog posting that spot market freight veterans know that by mid-January freight volumes and rates start trending down as the urgency of the holidays—even the most recent ones extended by e-commerce—wanes.

“2017 is no exception, although this year we're climbing down from a higher starting point,” he wrote.

And he added that 2017 January DAT Freight Index closed at a high not seen since January 2014 or January 2015.

“The year 2014 was the year of the Polar Vortex—the so-called ‘Snowpocalypse]—which, coupled with new hours of service rules, helped set records for freight and rates on the DAT freight exchange,” noted Harper. 2015 was the second highest year for freight and rates following 2014, although it came down precipitously after July highs, following typical seasonal trends.”

In a recent interview with LM, DAT Industry Analyst Mark Montague explained that the current stretch of gains in spot market activity, prior to January’s decline, needs to be place in somewhat historical context.

“We went through a period where 2014 was a record year for the spot market and rates climbed very steeply for both spot market and contract rates,” he said. “And in 2015 there was still momentum in contract rates, but spot market rates started to lose some of their steam and spot rates started to slide into the first quarter of this year, hitting bottom in March and April. There was then a recovery of rates after, as well as a recovery of volumes and the indicators in the load-to-truck ratio turned positive.”

While things are getting better in the market, Montague made it clear that the growth is not accelerating at such a quick clip that every stakeholder is unanimously on board with the improvement. And he explained that while there may be a “little bit less” capacity out there, there is still “sufficient” capacity in most situations and regions of the U.S.