There was more freight to haul in October and the rates to haul it rose higher, according to industry sources.
The American Trucking Associations (ATA) reported that its seasonally adjusted For-Hire Truck Tonnage Index rose 0.4% over the September index, marking the third consecutive month of growth.
“The combination of solid retail sales, inventory rebuilding and generally higher factory output offset some areas of softer freight growth, like home construction,” said ATA Chief Economist Bob Costello. “Economic growth remains on solid footing, which is good for truck freight volumes going forward.”
Compared with October 2020, the ATA index rose 1.8%. For the year to date, tonnage is up slightly, just 0.1% compared with the first 10 months of 2020.
ATA’s index is calculated based on surveys from its membership and represents primarily freight hauled at contract rates.
ACT Research reported that freight volumes were down slightly for the month but that the demand for trucks to haul available freight remains strong.
“While the pandemic continues to cast uncertainty, the freight volume outlook remains positive,” said Tim Denoyer, vice president and senior analyst at ACT Research in the report. “In spite of the supply-chain constraints, retailers have managed to stock up ahead of the holidays.”
Denoyer also noted that the “consumer balance sheet is strong, and massive restocking demand remains ahead.”
The ACT report also calculates a Driver Availability Index that showed some increased driver availability in October. One reason, Denoyer said, was the news that most fleets will be exempt from proposed federal rules mandating vaccination against COVID-19.
“The large fleets who train the vast majority of the industry’s drivers would be impacted by the mandate,” Denoyer said.
If it’s true that more drivers are becoming available to hire, freight rates could be impacted. That’s because the supply of new trucks and trailers is still constrained by supply issues. There may be more drivers, but there won’t be more trucks.
“We continue to see a slower-than-normal rebalancing in U.S. trucking markets, featuring record rate increases,” Denoyer said regarding the issue of tight capacity, where trucks are in high demand to haul available freight.
“With some structural driver issues likely to outlast the pandemic and a generally positive freight outlook, we do not expect the market to loosen quickly,” he added.
The Cass Freight Index, compiled by Cass Information Systems reported that its shipments index rose 2.8% in October. The index was 0.8% higher than October 2020. The Cass Indexes include freight from multiple modes of transportation, including trucking, rail, ship, pipeline and air.
The Cass report, issued Nov. 15, stated: “Freight volumes remain capacity-constrained, as shown by declining rail volumes and the ongoing backlog of containerships at anchor waiting to unload, but the 2.9% month-over-month improvement shows a modest rebound as restocking demand remained elevated.”
Cass also monitors freight expenditures, comparing amounts spent on shipping from month to month and year over year. Per the Cass Index for Expenditures, cash spent on shipping rose 3.9% in October over September. The October index was a whopping 37% higher than October of 2020. Since freight levels have not increased at that torrid pace, the increased expenditures are being attributed to rate increases.
The Cass report states that “normal seasonality implies double-digit increases through most of the first half of 2022.”
While freight rates continue to climb across the board, many owner-operators are especially interested in spot rates.
A joint survey conducted by Bloomberg Intelligence and Truckstop.com predicts robust pricing into 2022.
“The survey data shows what has likely become the tightest trucking market in a generation and looks poised to keep supporting spot rates into 2022,” said Lee Klaskow, senior freight transportation and logistics analyst at Bloomberg Intelligence.
DAT Freight & Analytics reported a 2% rise in average spot rates in October over September numbers, bringing spot rates to an all-time high.
“Congested ports, intermodal yards and warehouses acted as a drag on the number of loads moved last month,” said Ken Adamo, chief of analytics at DAT Freight & Analytics. “As a result, retailers and online sellers took on higher truckload prices in order to make sure their freight is positioned for success for the November and December shopping period.”
DAT reported that the national average spot rate (including fuel surcharge) for van freight rose to $2.87 per mile in October, the fifth consecutive month of increase. Compared to October 2020, the average is up 47 cents.
Reefer and flatbed spot rates, according to DAT, averaged over $3 per mile for the sixth consecutive month.
According to DAT, load postings fell 3.3% in October while truck postings rose, an indication that capacity is expanding. There’s still a lot of room to expand, however. For example, there were 5.6 available loads for every available van truck posted, a ratio that provides plenty of options for equipment owners and portends the high rates will continue awhile longer. In comparison, in October 2020, the ratio was 4.3 loads per truck, and in October 2019, the ratio was 1.7 loads per truck.
If there’s a fly in the ointment, it’s that inflation is now at a 30-year high. In the Nov. 22 “Monday Morning Coffee” blog published by FTR Intel, writer Steve Graham explained, “It is important to remember that retail sales are measured in nominal terms. Although the total numbers look impressive, the consumer is getting a lot less ‘bank-for-the-buck.’”
What he means is that, due to inflation, increased spending doesn’t mean more goods being sold or more shipments for the trucking industry. That’s because consumers are paying more for the same goods and services.
“In other words, spending is up but the impact is muted,” Graham wrote.
One example is the cost of diesel fuel. A portion of the increased rates goes to fuel purchases. Fuel prices are up $1.22 per gallon from one year ago, according to the latest report from the Energy Information Administration. Other costs, both business and personal, are rising, too.
Still, favorable conditions for the trucking industry should be around for at least a few more months.
Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.