By Mark Montague, DAT Solutions
We've seen a lot of freight posted to the spot
market so far this year, so much so that contract carriers have made more trucks available to brokered freight. The added capacity helped
tamp down rates on a lot of high-traffic van and refrigerated freight lanes. Combined with steady
fuel prices, we haven't seen spot rates make any dramatic swings.
However, that can change with the weather.
As I write this, much of the Northeast is recovering from a blizzard, and we've all been around enough to know what to expect when severe weather hits on a Monday, when headhaul freight tends to move and carriers on the spot market are more selective.
Traffic stalls—literally—until the roads are cleared. Then there's a burst of activity due to pent-up demand. Just as rates start to settle into some kind of equilibrium, perhaps another storm rolls in and the cycle begins again.
On Monday, March 13, as the snow and sleet started to fly, inbound rates rose sharply on lanes heading from the Southeast into the Northeast. Average truckload rates from the Lower Atlantic to the Upper Atlantic region shot up by 12 cents compared to the previous week's average. Rates from the Carolinas to New England jumped 11 cents, and rates from Florida and South Georgia up to New England rose 9 cents.
There was also a 14-cents-per-mile surge on lanes from the Upper Midwest to the Southeast, suggesting that shippers were re-positioning freight outside the storm zone, but close enough to bring it into the Northeast as soon as the roads are clear.
If you're a shipper or broker, disruptive weather
is a way to put carriers to the test. Who can respond with trucks when conditions are tough
and capacity is tight? And what can you expect
from those carriers?
Truckers and intermodal carriers learned a lot from the Polar Vortex effect in early 2014, when winter storms in the Northeast wreaked havoc on the nation's supply chain for months. A few things have changed since then to mitigate the impact:
1. Truckers and railroads are better prepared for inclement weather. Major carriers all added equipment, hired more operational employees, and improved procedures and infrastructure for handling weather-related challenges.
2. Fuel is more affordable now, with the average price of diesel around $2.60 per gallon. That's good news for carriers: when trucks are sidelined, revenue is reduced, and any savings will help the bottom line.
3. The hours-of-service rollback, now permanent, restored some of the fleet productivity that was lost
A few things haven't changed.
When capacity is hard to find you may need to use a carrier you've never worked with before. A reputable load board will have an array of tools you can use to find a load, review rate histories, and check the creditworthiness, stability, and reputation of a broker or shipper. Once you identify a carrier, validate that company's DOT authority, insurance coverage details and safety rating.
If you need to move a load to a certain location, search for carriers who are based there and likely to need work that gets their drivers home.
And when you post a load, post a rate. Nothing gets a carrier's attention faster than a good rate per mile. What's "good" is open to interpretation, of course, so be ready to negotiate—or be prepared to wait until the snow clears.
Mark Montague is industry rate analyst for DAT Solutions, which operates the DAT® network of load boards and RateView rate-analysis tool. He has applied his expertise to logistics, rates, and routing for more than 30 years. Mark is based in Portland, Ore. For information, visit www.dat.com.