Trucking demand, spot rates fall year-over-year in June

Dive Brief:

Demand for van trucks in June fell by 50% year-over-year while demand sank nearly 75% for flatbeds and 55% for reefers, according to DAT's load-to-truck ratio. The ratio can be used to measure demand in the spot market: the higher the number, the harder time a shipper will have finding a carrier.
All three trucking categories saw their demand grow from May into June, but all experienced lower ratios than in 2018 and 2017, according to DAT's numbers.
Spot rates across the three categories were also down year-over-year, dropping more than 18% for vans and flatbeds and almost 17% for reefers, according to DAT.

Dive Insight:

Freight volume in June in the top 100 markets was up 22%, but the number of trucks was also higher than in 2018. "A record number of truck purchases last year has led to increased capacity," according to DAT.

But there has been lower demand for reefers due to "muted" produce harvests, DAT's Mark Montague said in a blog post. "When reefer freight is soft, that capacity moves to the van market," Montague said.

Avery Vise, the vice president of trucking at FTR, said in June demand for trucking was "slowing substantially," but the industry was coming off two "very strong years," according to Overdrive.

June was the peak or near peak month for all three trucking modes in 2017 and 2018 (the furthest back DAT's numbers go). This is proving to be the case again with all three modes seeing the highest level of demand so far this year. This is a result of seasonal shipments that begin with warmer weather, like produce and goods moving out of West Coast storage to move across the country, Montague points out.

"No doubt, bonded warehouses are being emptied to avoid the increased levies," he wrote about tariff concerns last month. "Short term, I expect we will continue to see elevated activity through June into early July."

It's hard to say how much the downturn in demand has to do with increased capacity from new trucks or fewer loads being ordered.

Cass has not yet released its June freight index, but when reporting its May numbers it said months of year-over-year downturn across the index were a sign of economic contraction. Since June is typically the strongest month for freight, these numbers will be an important indicator of upcoming economic trends.