US spring trucking surge arrives late

US spring trucking surge arrives late

Spot market truckload pricing last month hit its highest point since January but was still depressed compared with 2018. Photo credit: Shutterstock.com.

Truckload dry-van spot rates in the United States in June hit their highest point since January, rising to $1.89 per mile on average, DAT Solutions said Tuesday.

But those spot rates remained about 18 percent below year-ago prices, another signal suggesting a subdued and shortened spring peak for US trucking companies.

Truck demand on the spot market surged in the last week of the month, DAT said, with dry-van load volumes rising 11.9 percent as shippers rushed to move goods before the end of the quarter. Loads were up 35.9 percent from May, although down 50.3 percent from June 2018, when US spot rates were still climbing toward their peak last July.

The national average van rate for June was 10 cents per mile higher than May. Prices were up in major freight markets such as Los Angeles, where they rose 14 percent; Memphis, which saw a 12 percent increase; and Atlanta, where rates were up 11 percent. That indicates higher truck demand and tighter capacity as freight flows inland.

There was also a seasonal rush to get goods to retail stores before the July 4 holiday; truck demand typically slows after the holiday. Last July was an exception, owing largely to the front-loading of Chinese freight in May and June to avoid US tariffs that took effect in July. 

West-to-east truck spot rates climb

Trucking usually enjoys a retail-inspired spring demand surge that can begin as early as March or April. This year, that surge didn’t show until early June. Economic uncertainty, the government shutdown in the first quarter, trade disputes with China and Mexico, and widespread Midwest flooding and poor weather contributed to the late start.

Over the last six weeks, spot market dry van rates climbed about 10 percent on the top 100 van lanes tracked by DAT. Last week, rates rose on 66 of those lanes and dropped on 24. The remaining 10 held steady, DAT industry analyst Mark Montague said in a blog post.

DAT’s data show freight flowing from west to east, indicating stockpiles of goods shipped in the fourth quarter to avoid US tariffs are being released from inventory. The biggest price hikes occurred on lanes going from the central US to the Northeast, DAT said.

For example, average van rates on the Chicago to Buffalo, New York, lane jumped 31 cents in the week ending June 30, climbing to $2.56 per mile. Spot truck rates from Memphis, a major transfer point for intermodal freight, to Columbus, Ohio, rose 27 cents to $2.51 per mile. Memphis to Chicago gained 13 cents, rising to $2.41 per mile. 

Experience suggests the surge in pricing won’t last and won’t come near 2018 levels. The latest “truce” in the US-China trade war and the “indefinite suspension” of US tariffs against Mexico reduce the likelihood that shippers will pull imports forward into July, as they did last year. And there’s still plenty of inventory to draw down, according to the latest US data.

April’s US average inventory-to-sales ratio was 1.39, just as it was in December 2018. 

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