The latest Truckload Volume Index (TVI) from DAT Freight & Analytics reveals a sharp decline in February freight volumes following a brief recovery in early 2023, signaling potential new challenges for the logistics sector. The report not only highlights the volume drop but also analyzes key factors driving this trend and potential future developments.
DAT Truckload Volume Index: The Barometer of Logistics Industry
The DAT Truckload Volume Index (TVI) serves as a crucial indicator of U.S. trucking market activity. Tracking monthly changes in transported goods volumes with January 2015 as the baseline (set at 100), the index covers three primary truck types: dry van, refrigerated, and flatbed, providing a comprehensive view of overall freight market trends. By analyzing TVI fluctuations, businesses can better understand market supply-demand dynamics and make informed operational decisions.
February Data: Across-the-Board Decline
The February TVI delivered sobering news:
- Dry van TVI: Dropped to 207 in February, down 8% month-over-month and 5% year-over-year.
- Refrigerated TVI: Fell to 162, declining 7.9% monthly and 4.7% annually.
- Flatbed TVI: Held steady at 217 (versus January's 218) but showed 7.9% annual growth.
While DAT noted February's shorter duration contributed partially to the decline, the downward trend remains concerning. More alarmingly, persistently falling spot rates have intensified market pessimism.
Freight Rates: Hitting Rock Bottom
February saw significant drops in average spot rates across all truck types:
- Dry van: National average spot rate fell $0.14 to $2.24/mile, $0.63 below contract rates - the lowest since August 2020 and down $0.85 year-over-year.
- Refrigerated: Dropped $0.19 to $2.59/mile, $0.57 below contracts - lowest since October 2020 and down $0.95 annually.
- Flatbed: Declined $0.06 to $2.70/mile, $0.73 below contracts and down $0.51 year-over-year.
Linehaul rates (excluding fuel surcharges) also retreated to pre-holiday levels, further squeezing carrier profit margins.
Load-to-Truck Ratio: Oversupply Intensifies Competition
The February load-to-truck ratio decline indicates more trucks chasing fewer loads:
- Dry van: National average fell from 3.0 to 2.5 (versus 13.7 in February 2022).
- Refrigerated: Dropped from 4.9 to 3.8 (13.7 in February 2022).
- Flatbed: Rose slightly to 13.6 from 12.5 but remained far below February 2022's 83.9.
Expert Analysis: Temporary Dip or Sustained Trend?
DAT Chief Analyst Ken Adamo observed that falling spot rates are pushing carriers toward contract freight rather than spot market opportunities.
Dean Croke, another DAT Chief Analyst, noted the firm anticipated Q1 market softness since late 2023. He characterized February's minor dry van rebound as month-end noise rather than trend reversal, emphasizing current spot market volumes at half of last year's levels but aligning with pre-pandemic norms.
Croke highlighted that resolved port congestion and reduced imports have impacted trucking demand. While imports constitute only about 10% of truck freight, fewer port-related transloading needs have decreased overall volumes.
Capacity Glut: A Lingering Challenge
Croke identified oversupply as the primary market challenge, tracing it to June 2021's monthly addition of approximately 8,000 new carriers. Though exits have increased, the pace has slowed to about 2,000 monthly - insufficient to rebalance supply-demand dynamics.
Market Outlook: Cautious Optimism
Croke projects potential dry van market inflection by late Q1 or early Q2, with rates nearing bottom after five weeks of decline. He anticipates tightening cycles as capacity exits accelerate, particularly as shippers shift to spot markets for cost savings.
With $1.75/mile rates approaching carrier break-even points and diesel price declines failing to offset rising operational costs, Croke predicts contract rates may rise within four to six months as replacement rates continue falling about 11%.
Key Market Influencers
Beyond DAT's findings, several macroeconomic factors shape freight market trajectories:
- Economic growth patterns and potential recession risks
- Consumer spending fluctuations
- Manufacturing activity levels
- Inventory management strategies
- Fuel price volatility
- Regulatory changes
- Technological innovations like autonomous trucks
Survival Strategies for Carriers
To weather current conditions, trucking firms should consider:
- Optimizing route efficiency and reducing empty miles
- Implementing strict cost controls
- Diversifying client portfolios
- Enhancing service quality
- Investing in operational technologies
- Flexibly adjusting capacity
- Strengthening risk management
- Exploring strategic partnerships
The February DAT TVI underscores significant logistics sector headwinds, with falling volumes, declining rates, and excess capacity creating survival pressures. However, strategic operational adjustments and efficiency improvements may position resilient carriers to capitalize on eventual market recovery.