Line-haul spot rates sink to lowest in nearly 2.5 years as contract gap widens
DAT said in December 2022 that van line-haul spot rates had fallen every month of the year, while shippers turned to the spot market ahead of a possible rail strike.
In December 2022, DAT Freight & Analytics reported that truckload spot rates kept falling in November, extending a decline that had run all year. DAT released the data on Dec. 14.
Rates at multi-year lows
The national average spot van rate fell 5 cents to $2.38 a mile, 55 cents lower than a year earlier. The reefer rate dipped 1 cent to $2.80, down 65 cents from November 2021. Flatbed fell 6 cents to $2.82, down 24 cents.
Without fuel, the picture was weaker. The van line-haul rate fell 6 cents to $1.71 a mile and reefer fell 2 cents to $2.07. Both were the lowest since June 2020, nearly 2.5 years earlier. Van and reefer line-haul rates had fallen every month since January 2022, when they were $2.70 and $3.15 a mile.
Demand on the load boards
The van load-to-truck ratio averaged 2.7 loads per truck, the lowest monthly level since May 2020. The reefer ratio slipped from 5.1 to 4.9. The flatbed ratio fell from 12.5 to 9.3, its eighth straight monthly decline.
DAT's van Truckload Volume Index fell 9.5% from October and 4.4% from a year earlier. The reefer index fell 4.5% from October and 5% year over year. Flatbed volume fell 11% from October but was 13% higher than in November 2021.
The rail strike factor
Ken Adamo, DAT's chief of analytics, said volume was relatively strong in the second half of November. Along with Thanksgiving seasonality, he pointed to a surge in major intermodal ramp markets such as Los Angeles, Chicago and Kansas City. Shippers used the spot market to reduce the risk of disruption from a potential rail strike, he said.
Contract rates and the widening spread
Contract rates were softening more slowly. The average contract van rate fell 2 cents to $3.07 a mile, still 12 cents above November 2021. Contract reefer was $3.37, and contract flatbed rose 3 cents to $3.65.
Spot and contract van rates had been almost equal in February 2022. By November, the gap between them had grown.
Adamo said new contracts replacing expiring ones in November were 12% lower for vans and 16% lower for reefers than in October. DAT expected both spot and contract rates to keep falling, with the gap narrowing in the first quarter of 2023.
What it meant for carriers
Carriers closed 2022 with spot line-haul rates at their lowest since mid-2020. Shippers resetting contracts at lower rates signaled that carriers with mostly contract freight would also see their rates come down in 2023.