US spot truck rates rise slowly amid COVID-19 restart

US spot truck rates rise slowly amid COVID-19 restart

Returning freight activity to ‘normal’ pre-pandemic levels may take a year, an FTR analyst warns. Photo credit: Shutterstock.com.

Truckload demand is inching up as the United States takes its first tentative steps toward an economic restart, with pricing on the top 100 dry-van spot market lanes increasing last week for the first time since mid-March, DAT Solutions said Thursday. Produce season is one reason spot truck capacity is tightening in Southern California, Texas, and central Florida.

There were notable increases in outbound DAT spot rates from Memphis, Tennessee, to Indianapolis, which rose $0.17 to $1.84 per mile, and from Memphis to Columbus, Ohio, which rose $0.10 to $1.63 per mile. However, long-haul rates remained depressed, with the average DAT spot rate from Chicago to Los Angeles falling $0.13 to $1.13 per mile.

Trucking operators and shippers are attempting to climb out of a deep economic hole, and for many, the climb will be a long hard one. The reopening of America is proceeding “in fits and starts”, Avery Vise, vice president of trucking for FTR Transportation Intelligence, said during a webinar on the COVID-19 pandemic Thursday sponsored by technology firm Trucker Tools.

Although freight demand is returning in some sectors and regions, Vise said there has been so much disruption it is going to be difficult to have a clean acceleration for quite some time. 

Trucking activity hit bottom in mid-April and has increased since, but does not show signs of heading upward in a substantial or consistent manner, according to FTR analyses.

FTR, collaborating with spot truckload marketplace Truckstop.com, is tracking trucking’s recovery through a series of indices that compare daily spot market freight volumes with five-year averages for that day, indexed to freight activity levels in February. The overall Truck Freight Recovery Index bottomed at 28.9 on Apr. 17 and climbed to 47.3 by May 13. 

The dry van index, which rose to almost 140 in March as demand for essential products soared, bottomed at 42.6 on Apr. 24 and climbed to 59.2 by May 13, but that puts it at just the edge of the “early restart phase”, according to FTR. The flatbed index hit bottom at 20.7 — nearly 80 percent lower than February — on Apr. 17 and has only climbed to 38.6.

The refrigerated activity index indicated a stronger revival for refrigerated carriers, as some institutional food service business came back and the produce season began, but activity dropped in early May, according to Vise. “We’re seeing a lot of inventory restocking, but we expect to have a little bit of softness for a while,” he said. 

The path of the recovery, he said, will be “inconsistent and not always predictive”.

Getting back to ‘normal’ freight volumes may take a full year, he warned. “If by normal you mean getting back to where we were in February, which was not a great market but not a bad market, we’re probably going to be well into 2021 before we get to that level,” Vise said. “There’s been real financial damage to consumers and there’s no way around that.”

Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy.