US spot truck rates soar on 2018’s frigid start

US spot truck rates soar on 2018’s frigid start

Businesses will be watching spot rates closely in the next few weeks to see if demand and capacity move back toward an equilibrium. Photo credit: Shutterstock.

The weather was frightful the first week of 2018, and for shippers looking to move freight by truck on the US spot market, rates were too. Extreme cold that blanketed most of the northern United States, compounded by Winter Storm Grayson, which swept up the East Coast Jan. 3 to 4, lit a fire under the truckload spot market as disruption squeezed an already tight truck capacity.

After ending 2018 at a high point, the average US dry van spot rate shot up 19 cents to $2.30 per mile in the week that ended Jan. 6, according to DAT Solutions. The load board operator’s national average refrigerated spot rate soared 25 cents to $2.71 per mile. High freight demand collided with tight capacity and Grayson to create “the perfect rate storm.”

“The number of available loads increased 27 percent, in-line with expectations when a full work week follows a holiday-shortened one,” DAT said in a statement. “However, the number of trucks posted to DAT load boards was up just 7.4 percent and the imbalance pushed load-to-truck ratios up” for dry vans, refrigerated trucks, and flatbed tractor-trailers.

DAT’s average US flatbed spot rate, already above $2.30 per mile, jumped 10 cents to $2.43 per mile. Flatbed load posts surged 46 percent and truck posts increased 20 percent in the first week of January. Flatbed demand is driven by construction, and US single-family housing starts hit their highest point since 2007 in November, rising 5.3 percent to 930,000.

Businesses will be watching spot rates closely in the next few weeks to see if demand and capacity move back toward an equilibrium, or if capacity constraints, including the electronic logging mandate that took effect Dec. 18, continue to boost spot truck pricing. A tighter, pricier spot market could in turn put more pressure on motor carrier contract rate negotiations.

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