DAT Truckload Volume Index highlights a strong end to 2022 spot market rates

The December edition of the DAT Truckload Volume Index (TVI), which was recently issued by DAT Freight & Analytics, finished 2022 strongly, with various factors, including hash winter weather and a late surge of holiday goods, boosting demand for capacity, which led to the first sequential positive change, for spot truckload van and refrigerated freight rates, since January 2022.

The DAT Truckload Volume Index reflects the change in the number of loads with a pickup date during that month, with the actual index number normalized each month to accommodate any new data sources without distortion, with a baseline of 100 equal to the number of loads moved in January 2015. It measures dry van, refrigerated (reefer), and flatbed trucks moved by truckload carriers.

December’s van freight TVI came in at 215, down 4% compared to November and down 3.6% annually. This reading was 5.9% higher than December 2020, as well as the second-highest December reading in record, according to DAT. And the refrigerated (reefer) TVI, at 167, was off 4.0%, from November to December, and down 1.2% annually, with the flatbed TVI off 11.8%, from November to December, and up 3.2% annually.

DAT said that changes in the TVI represent the number of loads moved with a pickup date during the month. And it added that spot truckload rates are negotiated on a per-load basis and paid to the carrier by a freight broker, with DAT’s rate analysis based on $137 billion in annualized freight transactions.

DAT’s data highlighted the following takeaways for truckload volumes, load-to-truck ratios, and rates, for the month of December, including:

• the national average spot van rate was up $0.03, to $2.41 per mile and;
• the national average reefer rate rose $0.03, to $2.82 per mile;
• the national average flatbed rate declined $0.03, to $2.77 per mile;
• the national average line-haul rate, for van freight, rose $0.12, to $1.83 per mile, its highest level since September, with the reefer line-haul rate up $0.13, to $2.19 per mile, and the line-haul flatbed rate, at $2.08 per mile, for an $0.08-cent gain, from November to December;
• line-haul rates were down compared to December 2022, which saw van freight, reefer, and flatbed come in at $2.60, $3.04, and $2.60 per mile, respectively;
• the national average van load-to-truck ratio was 3.4 (there were 3.4 loads available for every van posted to the DAT One load board network), up from November’s 2.7, the lowest tally in a single month going back to May 2020—with the reefer ratio, at 5.7, up from November’s 4.9, and flatbed, at 9.8, up from November’s 9.3;
• the national average shipper-to-broker contract van rate fell $0.08, to $2.96 per mile, from November to December, and was flat annually, with the average contract reefer rate, at $3.24 per mile, down $0.12, from November to December, and up $0.15 annually, and the average flatbed rate down $0.13, to $3.53 per mile, and up $0.19 annually; and
• the gap between spot and contract rates came in at $0.55 for vans, $0.42 for reefer, and $0.76 for flatbeds  

“There was a peak season for truckload freight; it just arrived later than usual and with many of the variables you’d expect in December, from winter storms to a rush of retail sales boosted by last-minute deals for holiday shoppers,” said Ken Adamo, DAT Chief of Analytics, in a statement. “To borrow a football term, sometimes you have to let the play develop and not count out a season or freight cycle. December showed that seasonality is coming back to truckload freight. In your 2023 playbook, expect a slow January and February for spot freight volumes, which is consistent with previous years—at least, years that don’t include a Polar Vortex or pandemic.”

In a previous interview, Adamo said that when looking at some of the swings that have occurred over the course of this current freight cycle, what is happening now is that the market is seeing the amplitude and the frequency of the market, with changes going higher and more frequent, in that peaks have become more pronounced and the dips are getting lower. What’s more, he noted that going back 10 years ago, most industry stakeholders said things were on a 24-month cycle, and then after the 2017-to-2019 period, they said it was more of an 18-month cycle

“It seems to be kind of happening on a more frequent basis,” he said. Twelve- to-18 months seems to be the new norm. But it appears as though spot rates have reached a relative bottom, give or take. When the markets are about to turn, there's always some confusion, some false starts, some question of is it turning, is it not? You're going to see some of that. Contract Rates do still have a way to fall right just given how they lag spot rates, and they certainly have some more time to fall. We're still kind of steadfast in our prediction that spot race will start to march back up in Q1 and Q2 of [2023], which will coincide with the bottom of contract rates. And when you look at the bottom over bottom of each of the last few market cycles, you're looking at an 8%-to-9% compound and annual growth rate of contract rates. Which, if you look at GRI [general rate increases] that FedEx and UPS announced, and you look at any kind of publicly traded trucking companies’ driver pay increases, that all kind of jives with what they're seeing, and it kind of back checks against macroeconomic inflation. So, I think, when you look at all the tea leaves, it's a market that is struggling, but moving towards normalcy in that regard. And if all of that holds we would expect spot rates to essentially bottomed out, be plus or minus ten or so cents.”