Spot market demand continues to fall

The total number of spot market loads on DAT One dropped 16% last week from 2.9 million to 2.4 million loads posted throughout the network during the week of July 17, said DAT Freight & Analytics. Dry van load posts fell 14.8% week over week and were 36% lower than the same week last year. Reefer posts fell farther, 17.3%, compared to the previous week and were down 44% year over year. Flatbed load posts were down 16.6%, a 39% decline year over year.

Truck posts were up, sending demand metrics farther down and putting pressure with a similar trajectory for rates. All-in, national averages continued to inch down, though the van rate was unchanged from the prior week:

Van: $2.66 per mile
Reefer: $2.92, down 1 cent
Flatbed: $3.18, down 1 cent

The long-term picture for linehaul spot rates, excluding an estimated fuel surcharge, continues down in the spot market, as more freight continues to shift to contract-market movement as shippers look for stability in pricing.

For all the talk of an economic recession, likewise predictions of a "freight recession" going back to early on in the Spring, DAT said there was no real freight recession during the first half of the year, and certainly not in the last quarter. Overall truckload volumes were very strong in April, May and June, as they have been this month.

But on the spot market, an abundance of trucks plus high retail prices for diesel fuel have contributed to significant declines in spot rates, likewise the number of loads posted. The spread between the price of gasoline and diesel was 90 cents a gallon as a national average last week, an indication that there’s room for the price of diesel to come down further than it has in recent weeks.

One market to watch: Fresno, California, reefers

Harvests out West this year haven't lived up to expectations. Owner-operator of the Year Glen Horack noted early this summer his typical refrigerated loads in Spring out of the Pacific Northwest and elsewhere out West -- cherries, strawberries, onions -- "weren't there this year." Speaking in June, he noted, "it starts slowing down this time of year, anyway," dying off around the Fourth of July, then "produce goes good the rest of the year."

Yet DAT noted California harvests in particular were off significantly. In June, truckload volumes of California produce were around 38% lower compared to June 2021. Tomatoes, rice, oranges, berries, sweet cherries, almonds -- all are coming in at lower volumes this year due to volatile growing conditions including a multi-year drought.

The average outbound reefer rate from Fresno, the largest produce market in California, dipped 3 cents to $3.13 a mile ($2.37 minus that estimated fuel surcharge) last week for the third fall in a row. Load post volumes also fell by 33% week over week.

California produce season is such a major driver of rates and volumes on the spot market that any substantial reduction in loads will affect van and reefer carriers across the country. In general, DAT noted it would expect national average spot reefer rates to increase by 12 cents a mile in a typical June. This year, they dropped by the same amount.

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