Each month, we track freight rates, truck capacity and market conditions, then summarize what it means to shippers. Here’s what happened in the freight market for May and the first half of June:
What’s happening in Truckload Pricing & Rates?
Truckload rates increased severely in the first two weeks of June, but should level-out through the rest of the month to the predicted amounts in the chart above. Early June truckload rate spikes are due to:
- The first days of June followed the Memorial Day holiday, which historically results in less capacity on the road as drivers enjoy a long holiday weekend
- June 6-8 was the CVSA’s Annual Roadside Inspection. In past years during the 72-hour blitz, some carriers drastically reduce or cease operating as they fear their equipment and/or driver may get put out of service. Since the 2017 roadside inspection focused on load securement, we saw the flatbed rates increase and supply decrease.
What’s Happening in Market & Capacity?
- Every year from April to July, there is a rise in produce shipping throughout the country – it’s commonly referred to in the freight world as “produce season”. The largest volume of fruits and vegetables are harvested and shipped to food manufacturers, grocery stores and other vendors across the country during this time, creating an imbalance in supply and demand. Large amounts of dry van and reefer truck supply are utilized to move produce, driving rate increases and tighter capacity. This year however, it started a lot later and thus is having a later effect vs. traditional timing. In addition, this year’s crop of produce doesn’t seem to be as large as 2016 due to the mid-March freeze in Georgia, and North Carolina. Those regions will be shipping significantly less produce.
- Flatbed demand is decreasing due to auto sales and new single family housing production numbers starting to slow.
What’s Happening in LTL
- LTL carriers are remaining very disciplined in pricing with contracted increases running between 3-5%.
- Estes launched Canadian LTL service on May 22nd. This is exciting news as it provides additional cross-border options for shippers moving their freight throughout North America.
- Dimensioners are becoming more and more prevalent in the LTL industry. In our weekly carrier meetings, we consistently hear of capex being allocated to adding them. It’s proven to be an invaluable tool to help carriers truly understand their costs and improve how they price out new opportunities and for annual adjustments.
- With the increasing per barrel cost, FSC percentage is averaging 21.7% with below carriers. LPS contracts our FSC for the most part, which is running about 8% lower than the average.
- Technology providers, such as Project44, are introducing volume LTL integrations via API, that connect shippers and 3PL’s with carriers in near real time. API helps eliminate the older forms of communication such as email, phone and EDI. Savings on shipments will vary based on commodity, volume, lane, etc. but can run in the 20-40% range over a typical LTL rate.