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Freight volumes, spot rates fall in February

March 14, 2023
Demand for truckload services fell in February as spot rates drop, widening the gap between spot and contract rates due partially to lower diesel prices and subsequent fuel surcharges.

Freight volumes and spot rates slipped in February while load-to-truck ratios, which indicate demand for truckload services on the spot market, hit their lowest points since May 2020, according to trucking research firm and load board operator DAT Freight & Analytics.

National average spot rates for dry van and refrigerated freight hauling dropped to levels not seen since September 2020.

“Truckload volumes retreated while the spread between spot and contract rates expanded to where they were before the holidays,” said DAT Chief of Analytics Ken Adamo. “February volumes and spot rates gave carriers little incentive to move away from contracted freight.”

February’s national average spot rate for dry vans was $2.24 per mile, down 14 cents compared to January—the lowest monthly average since August 2020 and 85 cents less than February 2020. For reefer, the average dropped 19 cents to $2.59 per mile, 95 cents fewer year over year, and the lowest monthly average since October 2020. Flatbed fell by six cents to $2.70 per mile, 51 cents fewer year over year.

See also: DAT: Truckload volumes set January record

Lower fuel prices in February dragged spot rates down further due to fuel surcharges being at 12-month lows.

The gap between spot and contract rates widened last month, with van spot rates averaging 63 cents fewer than average contract rates. Reefer and flatbed spot rates were, respectively, 57 and 73 cents fewer than their correlating contract rates.

This widening chasm between spot and contract rates has been most difficult for owner-operators, who rely heavily on the spot market for their income.

See also: Small fleets, owner-operators struggle living off current spot market

One owner-operator, in response to the 2022 Freight Rate Survey published Feb. 22 by the Owner-Operator Independent Drivers Association, said, “I own my equipment, I have no payments, and I am still struggling to survive. Owner-operator[s] with only one unit under their authority are being squeezed out by [larger carriers] that can do it cheaper because they have the cushion needed to operate at or near a loss. They get bulk [fuel] discounts, and they get all the contracts because they can underbid any single-unit operation.”

See also: Truck driver pay concerns grow amid freight slowdown

Falling freight volume also caused spot rates to dip, although there was higher demand for flatbed haulers, according to DAT’s load board data. The average van load-to-truck truck ratio fell from 3.0 to 2.5, meaning there were 2.5 loads for every van posted to the DAT One marketplace last month. The ratio was 13.7 in February 2022. The reefer ratio averaged 3.8, down from 4.9 in January and 10 points fewer than in February 2022. Flatbed, however, saw 13.6 loads posted for every truck, up from 12.5 in January, though only a fraction of February 2022’s average ratio of 83.9.

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