Dive Brief:
- While the month of September showed van freight volume 33% higher than in 2015, and reefer freight up 27%, rates have not caught up with demand, likely to due to too many available trucks, according to an Overdrive analysis.
- The Hanjin bankruptcy filing sparked a boost in van spot rates in the U.S. West, and reefer rates likely rose again this week, with shippers having moved freight out of the path of Hurricane Matthew. Rates could rise after the storm clears, due to pent-up post-Hurricane demand in Florida and the Southeast region.
- Although van rates have been rising in the West throughout Q3, reefer rates show a less reliable trend of regional growth. Rather, reefer demand appears to be growing in certain states, notably AR, ID, NE, ND, and NM.
Dive Insight:
Spot rates are closely aligned to demand, so as the Hanjin fallout continues and disruptions from Hurricane Matthew unfold, the short-term rise in rates should be no surprise.
More importantly, though, the rates show a wider trend: not much has changed in the spot market despite the heavy disruptions revealing the trucking industry's low rates as largely resilient.
Long-term industry trends may change this, however, but that will come down to industry-wide decisions on how to best adapt to a changing market. On one hand, the industry is facing a shortage of truck drivers given high turnover rates — a reality that could change with more strict hours of service regulation. On the other, Overdrive claims the industry may have a truck overcapacity, which is likely also a contributing factor to the first trend.
If the industry attempts to normalize their internal supply of trucks and drivers, and spur more drivers, the supply chain may see increased rates.
