Dive Brief:

• In June, demand for trucking continued to improve. DAT's load-to-truck ratio, a measure of demand, was up almost 13% year over year (YoY) for vans, up 7% YoY for reefers and up 23% YoY for flatbeds. However, overall volume in June still remained lower than a year ago, according to the most recent Cass report.
• Spot rates remained lower compared to the same month last year, but were up month over month. Compared to May 2020, flatbed rates grew almost 9%, reefer rates were up 6% and van rates rose 13%, according to DAT.
• "In our view, U.S. freight volumes ... will not return to 2019 levels until 2021 at the earliest," Cass wrote in its report.

Dive Insight:

Shippers left the market in April and May as manufacturing shuttered and retailers canceled orders.

"The speed at which the freight environment deteriorated at the end of the first quarter was like nothing experienced in the history of the company," Landstar CEO Jim Gattoni said on the company's second-quarter earnings call last week.

Landstar had 60,000 fewer truckload loads in Q2 than a year before. Trucking companies have also said that volume began improving in May and June.

As the market has begun to recover, the coronavirus outbreak is still ravaging different parts of the country, with many locations posting record numbers of cases in recent days. This leaves a significant amount of uncertainty for shippers and the trucking companies working with them.

"They don't know what the future of the pandemic is," Landstar Chief Commercial Officer Rob Brasher said on the company's earnings call, referring to customers. "They don't know what the future of their plant closures or openings are. Everybody is kind of influx right now."

Kenny Vieth, ACT Research's president and senior analyst, said in a statement that while the firm doesn't expect any more state-level shutdowns, the raising case numbers in some states could lead to supply chain disruptions, "if any of those states are shuttered for several weeks."

Rates fell alongside volume as shippers left the market in the early days of the pandemic, but Knight-Swift expects spot rates to improve in their favor through the remainder of 2020 and result in more expensive contract rates for 2021, according to the company's earnings presentation last week.

Total freight expenditures were down more than 18% in June, according to Cass.

Excess capacity in the trucking market has helped to bring down rates and has also impacted intermodal, according to UBS.

"While the current TL market is tight, excess capacity in the truckload market can weigh on TL pricing, which, in turn, can be a drag on intermodal pricing and volume," UBS wrote in a research note earlier this month.