As summer heat gradually fades, the pulse of the freight market slows in tandem. According to the latest data from DAT, a subsidiary of Roper Technologies, North American trucking spot market activity declined for the second consecutive month in August. The report, titled DAT North American Freight Index , is regarded as an authoritative indicator of transportation trends.
The downturn was primarily attributed to weakening flatbed demand and seasonal cooling of dry van requirements. However, against this downward trend, refrigerated truck transport volumes bucked the trend, approaching historic peaks and offering a glimmer of optimism.
Looking ahead to September, DAT forecasts continued year-over-year declines in freight posting activity. The unusual market conditions created by Hurricanes Harvey and Irma in September 2017—which caused supply chain disruptions and spot market demand surges—make direct comparisons with this year's data challenging.
Key August Spot Market Metrics:
- Overall Rates: National average spot market rates dipped slightly from July but remained 20% higher year-over-year across all equipment types.
- Dry Vans: Average rates fell 13 cents to $2.14 per mile, primarily due to increased capacity.
- Flatbeds: Average rates dropped 12 cents to $2.64 per mile, driven by slowing energy and construction sector activity.
- Reefers: Average rates declined 10 cents to $2.49 per mile as agricultural harvests entered seasonal transition.
- Annual Comparison: Dry van, flatbed, and reefer spot rates showed year-over-year increases of 35 cents, 46 cents, and 31 cents respectively.
Despite monthly fluctuations, 2018's spot market maintains robust growth overall. Tight capacity, strong economic demand, and driver shortages continue supporting market vitality.
As Montague noted, current conditions present "a remarkable boom scenario," arguably the most significant freight period since 1980's deregulation. However, he raises a critical question: How can sufficient truck drivers and capacity be secured to restore market equilibrium?
Deep Dive: Underlying Market Drivers
Beyond DAT's reported flatbed and dry van demand shifts, macroeconomic conditions, policy adjustments, and technological innovation are shaping freight market dynamics:
- Macroeconomic Environment: Economic growth directly drives freight demand. Strong consumer spending, manufacturing expansion, and infrastructure development increase trucking needs, while economic slowdowns, inflation, and rising interest rates may suppress demand.
- Policy Impacts: Trade policies, tax reforms, and regulations significantly influence freight markets. Tariffs can alter import/export patterns affecting regional demand, while regulations on driver hours, safety standards, and emissions impact capacity and costs.
- Technological Innovation: Logistics technology advancements are transforming operations. Freight platforms leverage big data and AI to optimize routing and match loads with capacity, while autonomous and electric trucks promise future industry disruption.
Flatbed Demand Decline: Multiple Factors
The DAT report identified flatbed demand contraction as a primary contributor to August's spot market softening. Several interconnected factors drive this trend:
- Energy Sector Slowdown: As a major flatbed consumer, oil/gas price volatility, reduced drilling activity, and delayed pipeline projects decrease flatbed requirements.
- Construction Pullback: Flatbeds transport construction materials and equipment. Declining home sales, reduced commercial real estate investment, and infrastructure budget cuts diminish construction activity.
- Manufacturing Cooling: Fewer manufacturing orders, inventory buildups, and export declines reduce industrial flatbed needs.
Reefer Resilience: E-Commerce and Cold Chain Growth
Refrigerated transport's countercyclical strength highlights fresh food e-commerce and cold chain logistics expansion:
- Grocery E-Commerce: Rising consumer demand for fresh food drives online grocery growth, requiring reefer transport from farms to consumers.
- Cold Chain Advancements: Improved temperature-controlled logistics enable perishable goods to reach broader markets.
- Health Consciousness: Consumers increasingly prioritize fresh, healthy foods, boosting reefer demand.
Capacity Constraints: Persistent Challenge
Tight capacity remains a fundamental market support:
- Driver Shortages: Aging workforce, challenging conditions, and recruitment difficulties constrain labor supply.
- Regulatory Limits: Hours-of-service rules, safety mandates, and emissions standards restrict available capacity.
- Aging Equipment: Capital constraints prevent some carriers from modernizing fleets.
Future Outlook: Balancing Risks and Opportunities
The freight market faces macroeconomic uncertainties, policy shifts, and technological disruption while offering growth potential through e-commerce expansion and logistics innovation.
Businesses must embrace technology, optimize supply chains, forge carrier partnerships, and invest in talent to navigate this evolving landscape. While August's data suggests market recalibration, structural strengths persist—requiring vigilance and adaptability for long-term success.