The trucking industry has been very volatile since early in the year due to the coronavirus pandemic. Demand for shipments were down in March, April and May but started to come back in June, July and August. Flatbed trucking volume in July was noticeably steady compared to the previous month although it is still down by 6.6% compared to July last year.
In the past Junes, there have been yearly peaks in spot markets and June is usually the highest month. This year, it is different because there is a continued upward trend for spot freight instead of dropping off for July and August. Truckstop.com an online freight-matching marketplace revealed that demand for loads increased by 5.4% during the week ended in August 7. Spot rates also increased by 1.6%.
The trucking environment is fast evolving. Going back to April and May timeframe, you will notice a fairly significant decline in rates in the spot market without any changes in contract rates. Spot market rates refer to shipments that have to be moved very quickly while contract rates refer to the agreed price of moving a certain type of shipment over a certain period of time.
Carrier networks are out of balance because of inconsistent freight demand at commodity and lane level. This has resulted to a spike in demand for spot freight to meet the capacity needed. Supply and demand have been over all the place and trucking companies have to adopt to the changing demands particularly in retail.
Spot rates were at their lowest at $1.35 in April when restaurants were closed and people were staying home. Now, spot rates are exceeding $2 per mile which is an unprecedented level of rate increase. Reefer rate is at $2.30 per mile which is 13 cents more than June and 7 cents lower than July 2019.
Demand for flatbed trucking is expected to continue through the rest of the year because the holiday season is just a few months away. It is recommended for building materials, oversized construction equipment and manufacturing components to be transported via traditional flatbed or extended flatbed among other options for quick and easy loading.