DAT Truckload Volume Index hits new records in December

The most recent edition of the DAT Truckload Volume Index (TVI), for the month of December, which was recently released by DAT Freight & Analytics, again resulted in new highs for certain spot truckload freight categories.

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 reading—at 236—was off 3% compared to November, a month which matched October in setting a record for the number of loads moved by motor carriers in a month, according to DAT. And national average truckload spot van and reefer rates saw gains for the seventh consecutive month, with the average van rate hitting the $3 per mile mark for the first time. What’s more, van and refrigerated (reefer) truckload freight rates each set new records, up 21.9% and 29.5%, respectively, on an annual basis.

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 rate, for van freight, at $3 per mile, was up $0.07 compared to November and up $0.54 annually;
• the average spot reefer rate, at $3.47 per mile, was up $0.02. following a $0.17 November gain, which represented the largest annual gain since June 2018, and increased $0.79 annually, with the spot reefer rate hitting new highs for six consecutive months;
• the national average for spot flatbed loads rose $0.02, to $3.08 per mile, and a $0.59 annual increase;
• the number of loads posted to the DAT One load board network headed up 13.7% in December, with truck posts off 10.5%, and on an annual basis, load posts were up 48.8%, and truck posts saw a 6.9% increase;
• the national average van load-to-truck ratio, at 6.5, was up over November’s 5.2, the reefer load-to-truck ratio, at 14.0, was up over November’s 11.9, and the flatbed ratio, at 51.1, was up over November’s 37.5, driven by unseasonably warm weather extending the construction season; and
• the national average shipper-to-broker contract van rate, at $2.94 per mile, was up $0.01 over November, while the average contract reefer rate was off $0.01, to $3.11 a mile, and the average contract rate for flatbed freight was flat, at $3.34 per mile

“While it’s not unusual to see a decline in the number of loads moved from November to December, spot-market volume was historically strong last month,” said Ken Adamo, Chief of Analytics at DAT, in a statement. “Truckers experienced unparalleled demand during the holiday season.”

In an interview with LM, Adamo said that December lived up to expectations, and, for many, probably exceeded them, in terms of volume moving around and rates.

“I think some of the volume things are related in some ways, too,” he said. “It may have not been a huge impact, but there was some impact in pulling inventories and shipments forward, coupled with gridlock at ports. It was kind of feast or famine. If you are in the retail supply chain, if you got your stuff early it made it on to the shelves. But some industries were hit harder than others, like artificial Christmas trees, as an example and were just stuck and did not make it. That gridlock is still present, with the still-high number of container ships off the coast in Southern California, with the TEU count still likely in the millions, in terms of cargo waiting to be unloaded.”

The DAT executive described December as an end-of-the-year crescendo, living up to what the majority of stakeholders were waiting for.

When asked if December’s $3 per-mile spot van rate is sustainable, Adamo said that is likely not the case. He compared it to what he called the “100-truck problem.”

“If you assume a fleet has 100 trucks, historically, 12-to-15 of those are running the spot market, and the other 85 or so are running contract freight,” he said. “That is harmony, because the 12%-to-15% running on the spot market might be repositioning, or cancelled loads, or it might be an out of sequence shipment so they come to the spot market. What we saw throughout the year and peaking at the end of the year was maybe 30 or 40 of those trucks being used in the spot market. Carriers would tell you they would love to see it that way forever until the spot market eventually craters back down to $1.50 per mile. They would see that as not sustaining profit margins.”

He explained this represents a two-ended network, and with shippers it is continuing to ratchet up what they are willing to lock in on the contract side. And he said shippers are telling DAT they are seeing success, especially rounding 2021 and into 2022, getting commitments from carriers on the contract side.

“Relative to the 100-truck problem, operating a 30-70 spot-contract [ratio] will slowly switch back, whether it is by the end of the first quarter and contract gets back to the 75-80 range,” he said. “If we are at 85 by the end of the year, that will necessarily ease rates in the spot market.”

When asked about what shippers and brokers need to be focusing on, relative to spot freight, at this point of the year, Adamo said brokers should be trying to get aggressive on contract bids, as they are currently at a point, in a sense, in which they are at the top of a pretty high mountain, as it pertains to rates.

“You know shippers are looking for stability, in terms of service and price,” he said. “They are really willing to trade off what they are paying for stability and are willing to trade volatility for higher price and stability. At the end of the day, I am a little more willing to get aggressive on contracts, whereas last year I would not have been, because I would have missed out on 50%-to-60% price increases.”

On the shipper side, he said they need to be very mindful of the 100-truck problem, thinking about where the market is going to shifts and understanding there is not a need to overcommit to the contract market.

“We don’t know what the new normal will be, but we know it will return to the direction of normal,” he said. “If I am a shipper, I don’t want to overreact as the market begins to normalize. I think that is the cleanest way to put it.”