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Supply Chain News: US Truckload Volumes Falling Fast from Virus Related Drop in Demand


 

Small Carriers, Independents at Real Risk of Leaving the Industry if Loads do not Return Soon

Arpril 15, 2020
SCDigest Editorial Staff
     

Overall at the start of the US coronavirus crisis, US truckload volumes surged as consumers and grocery related retailers stocked up on food and other staples.

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"Rates aren't worth a crap," Barrett told Overdrive, adding that "I can go broke two ways: Hauling for nothing or not hauling."


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Now, the slowing of the overall economy outside a few sectors is really starting to have a major impact on truck freight volumes.

In its weekly Spot Market Update report (week 14), freight market research firm FTR on Monday noted that last week's spot market load availability for dry van and refrigerated freight has plunged to the lowest levels in nearly four years. The collapse in the spot market for truck freight was felt in all equipment segments.

In the flatbed sector, after surging a month ago to due to strength in residential construction, load levels have collapsed from levels that had approached elevated 2018 numbers to the lowest level of load availability since the fall of 2016.

What's more, FTR's Market Demand Index - the ratio of loads available to trucks available on load board Truckstop.com's system – has also plummeted for all segments. FTR says that the flatbed MDI is the lowest since late 2016, and the MDI for dry van and refrigerated are the lowest in about three years.

"If any upward pressure from restocking or supply chain disruption exists, it has been completely overwhelmed by the broader economic contraction – not surprising given that nearly 17 million Americans have filed first-time claims for unemployment benefits in just the past three weeks," FTR observes.

Dry van load availability fell nearly 37% in week 14 after a drop of about 32% the week before. Refrigerated loads fell another 33% after plunging 37% the week before. Flatbed loads, which saw no boost from restocking during March, plunged nearly 35% after falling almost 29% the week prior.

Naturally enough, spot rates are falling fast in the face of much lower demand. The dry van broker-posted rate per mile excluding fuel surcharge plunged more than 21 cents in week 14 after a 10-cent drop the week before. Refrigerated spot rates fell nearly 22 cents after a 21-cent drop in week 13.

FTR also says that flatbed spot rates fell more than 12 cents, which is a very large move in that segment, and specialized spot rates were down more than 11 cents.

Just released data from DAT Solutions, another load board, were similarly bleak.

 

DAT says spot market loads posted were down last week 41.7% verus the week prior. Spot rates for dry van loads were down 5.4% - and seem certain to fall further.

With both rates and volumes falling all carriers are hurting – but it may be owner-operators and small carriers that are taking the largest hit, due to their sort of "last man on the totem pole" status, and lack of capital to tide them over until better times.

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Overdrive magazine reported this week that some independent trucks are taking other jobs to keep some income coming.

For example, owner-operator Timothy Barrett of East Tennessee says he took a part-time job at Walmart after loads from his main carrier dried up.

"Rates aren't worth a crap," Barrett told Overdrive, adding that "I can go broke two ways: Hauling for nothing or not hauling."

Many independents hope promised bridge loans supposedly available as part of the federal stimulus plan are potentially one salvation, but when that money might actually start flowing is anyone's guess.

Carole Salver and her husband run small carrier Donald Salyer Transport out of New Hampshire.

She told Overdrive that the company is really struggling.

"My husband and I haven't gotten a paycheck," she said. "The little bit of money" they've earned in recent weeks "has gone into overhead, maintenance and bills," she said. Their six trucks are mostly "all just sitting in the garage."'

The key question: will owner-operators and small carriers, which comprise a significant amount of total US truckload capacity, be able to hold on until a freight recovery occurs?

Or will many go under and leave the industry – adding the severe driver shortage that has plagued he industry for a number of years be even worse when freight demand eventually returns?

 

How bad the current freight market? Will it get worse? Let us know your thoughts at the Feedback section below.


 
 

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