While the contract rates in 2015, 2016, and the first half of 2017, were mostly tough, last year’s second half showed a very different story — the market conditions shifted in favor of truckers after the implementation of the ELD mandate.
If that isn’t good enough news for truckers, the soaring rates are expected to continue for the first six months of 2018, according to forecasters and industry experts.
According to DAT Analyst Matt Sullivan, because of the Christmas freight rush and several operators going on holiday vacation, it’s hard to single out the full effects of the newly implemented electronic logging device mandate on the trucking industry’s spot market demand.
Sullivan said, “The new regulation and the holiday push definitely made for an even tighter market, though.”
He added, “And the national load-to-truck ratio for vans hit its highest number ever. As a result, rates were up pretty much everywhere.”
Because several truckers went on vacation days before Christmas, fewer operators were running their hauls. At the same time — specifically on December 18 — the ELD mandate was also implemented.
Due to both circumstances, and also factoring in the holiday season, the load-to-truck ratio for vans on a national level was higher than it’s ever been — up to 10.1 loads per truck.
Several scenarios contributed to the unusually high load requirements during the pre-Christmas week, with last-minute holiday gifts being a clear contributor.
As a result, van rates skyrocketed in nearly every major market in the third week of December. In fact, 82 van lanes (out of 100) had higher rates, a number that is most likely a record.
Except for some markets in the West Coast and Chicago (which had higher points in November), the rates peaked almost everywhere in the third week of December.
On the Eastern side of the U.S., the pre-Christmas preparation placed added pressure on rates. Some parts of the Northeast and Midwest, however, didn’t have much activity on Friday.
Dallas, on the other hand, had the best gains with their outbound rates going up 7% on average.
The other winners are Philadelphia, Atlanta, Allentown, PA., and Columbus, Ohio.
Out of all the markets, Seattle was the only one that experienced a decline in their outbound average during the third week of December.
Despite the decline, it’s worth noting that their average rate was 50 cents higher than Denver’s average outbound rate.
Even before Christmas, the reefer load counts were already high. The high load count is most likely a sign of the last-minute shipments made for the holidays.
Also, big produce markets in Florida, Texas, and California had exceptionally high volumes.
The reefer rates — just like the dry van freights — pretty much grew everywhere due to their strained capacity.
Similar to the case of vans, the reefer market in Dallas was the biggest winner in the third week of December. Their outbound rates were up 13%, and the lane from Dallas to Denver also went up 53 cents to $2.58 per mile.
California’s market also experienced a sharp increase. The lane from Sacramento to Portland, Oregon went up 91% to an average of $3.78 per mile.
Green Bay’s market performed quite poorly, though. Not only were their rates down, but so was their volume.
With current market conditions favoring truckers, the trucking industry is undoubtedly on the cusp of an even bigger breakthrough. The ELD mandate is expected to play a big role in creating more favorable market conditions for truckers.
Moreover, apart from the favorable market conditions, electronic logging devices are packed with features that would help carriers minimize their expenditures, improve efficiency, and maximize profits.
On the other hand, however, truckers without ELDs are not expected to reap all the benefits. Moreover, they would also be risking ELD violations and penalties.