Spot Rates Up -- Will It Last?

Good news in the freight market: spot rates are up. But before we get too excited, let’s take a closer look. Recent increases were driven by temporary factors that may not sustain these higher rates long-term.

The Numbers

• Spot rates: Up 11 cents since the start of May, according to FreightWaves SONAR data.
• Load-to-truck ratio: Increased to its highest level since early 2023.
• Dry van loads: Up 20.6% week-over-week on Friday.

Temporary Factors at Play

1. Roadchecks: The International Roadcheck initiative, which took place during the week ended May 17, decreased driver availability, pushing more loads to the spot market and slightly increasing rates. Following Roadcheck, rates continued to rise in the week ended May 24.
   • Week Ended May 24: Total broker-posted spot rates increased 1.7 cents after increasing about 3 cents during the previous week (ended May 17).
   • Dry van spot rates: Up 4 cents after rising 7.5 cents during the previous week.
   • Refrigerated spot rates: Up nearly 3 cents following a 13-cent jump during Roadcheck week.
   • Flatbed spot rates: Increased just over half a cent after a 2-cent rise the previous week.
2. Produce Season: The start of produce season always ramps up demand for refrigerated transport, adding pressure to spot rates.
3. Weather Conditions: Recent weather disruptions have also contributed to the temporary spike in rates.
4. Memorial Day: The holiday led to increased freight activity, further pushing up spot rates.

Insights from the Experts

Avery Vise, VP of trucking at FTR, noted, “International Roadcheck always results in a spike in spot rates. Many drivers don’t want to deal with inspections, so they take time off or call in sick.”

Jeremy Wolfe of FleetOwner mentioned, “Load posts and rates increased last week thanks to Roadcheck, but both remain lower compared to the same period last year.”

The Long-Term Outlook

While these temporary factors have pushed up rates, the long-term outlook remains cautious. Both FTR and DAT reported that rates are still down year-over-year and below the five-year average.

• Dry van rates: Up 4 cents from last week, but down 2% year-over-year.
• Refrigerated rates: Up nearly 3 cents from last week, but down 1.4% year-over-year.
• Flatbed rates: Up just over half a cent from last week, but down 6.6% year-over-year.

The recent increase in spot rates is a positive sign, but keep in mind recent temporary factors that have been in play. As these factors fade, rates may stabilize or even decrease.

Sources: Timothy Dooner on X | FleetOwner | FTR Transportation Intelligence