DAT’s September Truckload Volume Index trends down ahead of holiday season

The September edition of the DAT Truckload Volume Index (TVI), which was issued late last week by DAT Freight & Analytics, pointed to rate and volume declines, in advance of the holiday season.

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.

September’s TVI dry van freight reading—at 228—was off 13.7% compared to what it called “an unusually active August,” while remaining in line with previous years. And it added that the TVI was 2.9% below September 2021 and up 1.8% compared to September 2020. The September refrigerated (reefer) TVI was down 9.7% to 168, and the flatbed TVI was down 10.5%, to 231.

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 September, including:

• the national average spot rate was down $0.07, to $2.45 per mile, falling from August to September for the first time going back to 2015;
• the national average reefer rate dipped $0.05, to $2.84 per mile;
• the national average flatbed rate declined $0.14, to $3.64 per mile;
• the national average van load-to-truck ratio—at 3.5 (there were 3.5 loads available for every van posted to the DAT One load board network)—was flat compared to August, with reefer—at 6.3—down from 7.1, and flatbed at 13.3, down from August’s 14.1; and
• the national average shipper-to-broker contract rate fell for the fourth consecutive month, down $0.03, to $3.09 per mile, with the average contract reefer rate unchanged, at $3.40 per mile, and the average contract rate for flatbed freight off $0.05, to $3.64 per mile

“The usual peak period for van freight looks more like a mesa,” said Ken Adamo, DAT Chief of Analytics, in a statement. “The month-over-month decline in September truckload volume suggests that many retailers already have inventory in position, have tempered their expectations for the holidays, or some combination of the two.”

In an interview, Adamo said that when looking at market conditions, it is worth noting that September’s data, in some ways, represent to more normal readings, given how the bulk of the past two years could be akin to being on top of a mountain, as things conditions have been elevated from a rate and demand perspective.

“There is now this sort of returning back to something that resembles normalcy and feels a little strange,” he said. “There's a couple of things I think, that contributed to ironing out some of the peaks. One is the redistribution of port volumes. Last year we had that kind of single source bottleneck in the year prior through Southern California. September was the third month in a row that New York/New Jersey volumes topped Los Angeles/Long Beach. Savannah has been up, and Houston, which is primarily an energy port, is seeing some additional volume. That's going to necessarily iron out some of the bumps.”

Adamo explained that, on balance, though, the overall shape of things remains relatively in line with expectations, noting that on a day-to-day basis, 2022 is looking very similar to this time in 2018.

“You typically see, right in September that first bump when things come in on the first mile, and then we tend to lose in the spot market, some visibility to that freight as it moves through the middle mile right where it might move on full truckload to get to it to the first mile into its warehouse or distribution center,” he said. “It moves through private, dedicated, and contract fleets, and then we usually pick up on it again as we get closer to Black Friday. So, that's what we're expecting these next few weeks to pick up in terms of activity as freight, starting to move closer and closer to its final destination.

Addressing if securing capacity has become less pressing, given the current inventory outlook, Adamo said that it is incorrect to assume that all holiday season inventory is in and where it needs to be. The reason for that, he said, is that things remain selective for certain commodities, especially for goods with longer lead times.

“It's still going to be busier right if you are in and around the retail markets, or if you're in and around the retail space, this is going to be one of your busiest times of the year, no doubt,” he said. “Will it be easier to find a truck this year than the last three years? Absolutely, no doubt about it. Are your contract carriers going to be accepting a much higher percentage of their contracted freight. Absolutely. But I would still expect it to be, and it will be busier than non-peak periods.”

When looking at some of the swings that have occurred over the course of this current freight cycle, Adamo observed that 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 next year, 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 just 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 its kind of back checks against macroeconomic inflation. So, I think, when you look at all the t 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.”