Truckload Rates Keep Rising as Tight Capacity Fuels Freight Market Recovery

Truckload spot and contract rates continued to climb through May and June, signaling a recovery in the freight market after nearly three years of recession. This rebound is primarily attributed to a shrinking supply of trucks and drivers rather than a significant surge in freight demand. These capacity constraints are granting carriers increased pricing power and higher revenues as the industry approaches the mid-year mark. The shift suggests a supply-driven recovery that may resist returning to previous oversupplied conditions.

DAT Freight & Analytics reported that despite a month-over-month decline in truckload volumes for van, refrigerated, and flatbed freight in May, spot rates increased across all three segments. Specifically, van spot rates rose 22 cents per mile, reefer rates increased 24 cents, and flatbed rates gained 19 cents. Dean Croke, principal industry analyst at DAT, explained that capacity supply has decreased to meet demand, allowing carriers to be better compensated. The market tightening was further exacerbated by the CVSA International Roadcheck inspection blitz, Memorial Day disruptions, and ongoing immigration enforcement.

According to ACT Research, truckload spot rates excluding fuel are on pace to rise by more than 40% year-over-year this month. Tim Denoyer, ACT’s vice president and senior analyst, attributed this acceleration to tighter supply caused by lower equipment investment, driver shortages, and crackdowns on fraudulent electronic logging devices. ACT’s Driver Availability Index stood at 32.6 in May, significantly below the neutral level of 50. Ken Vieth, ACT president, noted that driver supply is likely to remain tight for an extended period, partly due to federal enforcement actions targeting non-domiciled CDL holders.

Demand indicators are also showing signs of life, with FTR reporting a 4.3% year-over-year increase in first-quarter trucking revenues and a 6.9% rise in general freight revenues. Data from Truckstop.com and FTR for the week ending June 19 showed a Market Demand Index nearly 97% higher than the previous year, while spot rates were up more than 50%. While analysts expect a typical seasonal slump following the July 4 holiday, they do not foresee a return to the oversupplied conditions of the recent freight recession. Improving industrial activity and tighter inventories are expected to provide additional support for freight demand in the coming months.