Comparing the spot market to normal trends probably isn’t a good comparison, based on analysis from DAT Solutions and FTR, with the upheaval to supply chains due to the COVID-19 pandemic.
DAT Solutions analysts, looking at the week of July 20-26, said spot rates are not following normal trends. Load posts on the DAT One load board network were still elevated for this time of year, with freight networks disrupted by the ongoing coronavirus pandemic. That has pushed truckloads that would normally move as contract shipments over to the spot market, with spot rates climbing during a time of year when the market would normally see declines in prices.
Average van rates of $2.03, flatbed rates of $2.19 and refrigerated rates of $2.29 are higher than rates have been in the previous three months. Spot load posts were down 3% from the previous week, after being up 22.5% for the month of June compared to a year earlier. Spot truck posts were up 1.9%.
Last week, analyst Dean Croke wrote in the DAT blog that several key factors cloud the current freight outlook: The possible end of the extended unemployment insurance program, COVID-19 outbreaks in many states, uncertainty in consumer demand, and rising retail warehouse inventories.
Meanwhile, total spot load postings in the Truckstop.com system were down 1.2% during the week ended July 24 from the prior week, but volume remained very strong compared to seasonal expectations, according to an FTR analysis. Dry van, refrigerated, and flatbed all saw slight declines week over week. Total loads, which were slightly above 2018 levels, were 41% above the same week last year and 50% higher than the five-year average.
FTR Transportation Intelligence and Truckstop.com on July 27 reported the “truck freight has been volatile, but the surge appears to have stalled at a strong level.”
The FTR/Truckstop.com COVID-19 Truck Freight Recovery Index showed that total freight recently approached – but didn’t exceed – its mid-July peak, FTR said, but the latest data shows a downtick. Volumes are volatile, but the trend line is basically flat.
“Although volume has flattened … it does so at a time when we typically would see volumes easing. However, given the sharp contraction in April, seasonal expectations might not as useful as a benchmark as it is in ‘normal’ markets,” FTR said.
“A stabilization in the spot market is not unexpected. First, the economy has had a couple of months to catch up to pent-up demand in the consumer and industrial sectors, so growth rates naturally should taper off. Meanwhile, carriers likely are bringing back more drivers, which should allow the route guide environment to handle more freight. And the surge in COVID-19 cases in June and July could be tempering demand somewhat in some states.”
Original Source: https://www.truckinginfo.com/10122353/spot-market-may-be-softening