The Year in Freight (So Far)

By Mark Montague

I sometimes feel like I have an unfair advantage when it comes to truckload market conditions. As an analyst, I get access to some amazing data derived from activity on the DAT Network of load boards. This pool of transactional data helps me identify economic trends weeks or months before they are reported by government sources or even the American Trucking Associations.

In January, I took a look at the data and offered five predictions for 2013. We’re more than halfway through the year now, and for the most part these predictions have come true so far—both about the trucking industry and about the economy in general. Let’s take a closer look at where we stand:

Prediction 1: Fuel

Fuel prices will decline by 10 cents per gallon, for at least part of the year, but stay high relative to carrier revenue. As the fuel price—and fuel surcharge—declines, the line-haul portion of rates will increase to compensate, so the total rate paid to the carrier should remain stable-to-2% higher over the course of the year.

Outcome: Fuel prices rose 2 cents in Q1 and dropped 16 cents in Q2, so my prediction was partially correct. However, the line-haul rates increased significantly only for reefers so far this year, not for vans or flatbeds.

Prediction 2: Rates

Spot rates will be atypically high in Q2, but increases will not be sustained throughout the year. A Q2 spike is normal on the spot market, but this year it should be exaggerated due to increased demand for all trailer types.

Outcome: Rates indeed peaked in Q2 at a higher level than I've seen before. Spot market rates rose first in late May and early June, then flattened out, rising again in early July. Contract rates responded with a significant increase in June.

Prediction 3: Capacity

Capacity should be adequate, with some short-term, localized shortages. I predict that economic growth in 2013 will be tepid, at best, so any capacity shortfalls will be seasonal.

Outcome: Capacity is holding up so far, despite changes in hours-of-service rules.

Prediction 4: Tonnage

Truck freight tonnage will increase by 2% and spot market freight availability will grow 5%. Last year, we saw a 3.4% increase in tonnage, according to the ATA For-Hire Truck Tonnage Index (not seasonally adjusted.) In 2013, expect flat or negative growth in Q1, followed by a strong Q2 and a rebound in the second half. Spot market freight availability rose 3% in 2012. I predict that 2013 will look more like 2011, with 5% growth for the year.

Outcome: I was right that growth in tonnage would be less in Q1 (3.5%) than Q2 (5.4%) but total growth was higher than expected. Spot market load volume beat expectations in Q1 (+13%) but came up short in Q2 (-18%). Freight availability dipped 5.8% for the first half of the year compared to the same period in 2012.

Prediction 5: Consolidation

Consolidation among freight brokers and 3PLs will affect individuals and companies, but there won't be a big impact on the overall market in 2013. The $75,000 bond requirement kicks in at mid-year, but enforcement is likely to lag. 

Outcome: No discernible effect yet. The deadline for the bond was delayed until Oct. 1, with enforcement to begin no sooner than Nov. 1. Two-thirds of our customers with broker authority report that they already have a $75,000 bond or trust fund. Of those who don’t, 79% say they are either shopping for the bond or intend to. Only 3% say they don’t intend to get a $75,000 bond.

Is your year shaping up as expected? Do you agree with my assessments, above? What are your predictions for the second half of 2013? Let me know: mark.montague@transcore.com.

Mark Montague is the industry freight analyst for DAT, which operates the DAT® Network of load boards and RateView analysis tool based on the matching of more than 68 million spot (non-contract) loads and trucks per year. He holds an MBA in Transportation from Indiana University as well as a Bachelor of Science degree in mathematics and has applied his expertise in rates and routing for carriers, 3PLs, and shippers for more than 30 years. He is based in Portland, Ore. For information visit www.dat.com.