The COVID-19 pandemic has impacted every part of the economy and the warehousing industry is no different. The logistics industry has been hit hard, particularly when it comes to imports and exports.
The spot load market has seen higher demand as of late, resulting in record-breaking rates. Late summer saw a big climb according to DAT Freight & Analytics. And in October, the industry saw averages reach all-time highs for dry van and refrigerated freight. We’ll look at what the numbers mean for the rest of the year.
All Equipment Types
Spot volumes have increased across all types of equipment. Compared to October of 2019, the dry van, flatbed, and reefer loads has risen nearly 9% this year. According to the Chief of Analytics, Ken Adamo, the industry should see rates continue to rise through the rest of the year. While it may not be at the same spike that we’ve been seeing, it represents a significant opportunity for haulers to bump up their bottom line.
For context, a typical spot van rate was $2.40 in October 2020, which was $.03 higher than September and $.60 higher than October of 2019. Line-haul rates were $2.21 per mile, a price that had been climbing for the past three months until reaching the highest national average of all time.
Spot Capacity Use
When volumes are as concentrated as we’ve been seeing lately, spot loads have been the most obvious answer for companies to meet their obligations. In addition to the increase in rates for spot volume, there should be an increase in freight under contract rates as we march toward the New Year. (Current contract rates are similar to those seen last year.) When 2021 rolls around, there should be a predictable slowdown in volume starting in late December.
The rates that we’re seeing are national averages that have proved just how critical freight management is right now. However, it helps to understand some of the driving forces, dips, and increases that are occurring from one state to the next.
Reefer freight is getting ready to see more action, with nearly all leafy veggies grown in either Arizona or California. Spot time-haul rates near the Arizona border rose by $.17 with volumes rising month after month. Fall vegetables from Florida resulted in a 22% rise in Miami and a 16% rise in Jacksonville.
Van freight is currently being driven by consumer goods, including retail, packaged, and over-the-counter health care items. Unsurprisingly, e-commerce has driven much of the activity, up 34% from last year. Retail freight continues to offer more opportunities this year for freight operators across the nation.
An increase in import freights is also expected to increase spot rates in Southern California as well. The sheer magnitude of container freight arriving during this time is expected to stretch capacity for a while. Seattle also saw truckload volumes increase after imposing a serious surcharge on small shippers who move their cargo by rail or intermodal.