Shippers today have a generally positive trucking experience. First tender acceptance in route guides is high, and spot market strategies are locating readily available capacity and achieving lower prices than this time last year.
As the market progresses through Q1 2023, historical seasonal transportation events begin to emerge. This month's report will discuss the floral market, which is typically the first market-based pressure point on trucking. The remainder of the report will provide insights and benchmarks to aid in comparative analysis and forecasting.
LTR national averages
The spot market for dry van truckload performed very well for shippers in the first quarter of the year, with pricing and capacity performing very well. Spot market load to truck ratios (LTR) have returned to pre-pandemic levels. Freight volumes versus available capacity pose strategic investment questions for carriers.
The first set of figures below depicts the current truckload spot market LTR, along with the five previous years for context. Recently, the market has been trending lower than the five-year average, which is one indicator that the market is oversupplied.
LTR dry van
The truck market's largest segment is dry van. In most markets across the country, it is outperforming the five-year average. For context, the dry van spot market is a little tighter than it was in 2019 and in the weeks preceding the onset of the COVID-19 pandemic.
As expected, LTR dropped as truck drivers returned from vacation, and normal January freight volumes were low. The market is oversupplied in January and early February. Carriers are deciding how to navigate the current market, with some owner-operators seeking opportunities by driving for larger fleets, parking trucks, or exiting the market entirely.
The majority (75%-85%) of the for-hire truck market in the United States is moved through commitments, which are typically managed through hierarchical route guides and dedicated truckloads. Most analysts now predict a material shift from 75% (some analysts predicted an even smaller share) of freight in the contract market in 2021 and early 2022 to roughly 85% (some predict a bit more) of freight in the contract market today.
Performance of the route guide
Companies frequently use waterfall (or hierarchical) route guides to manage awarded freight on lanes with some predictability in demand patterns. The following insights are derived from TMC, a division of C.H. Robinson that serves a diverse range of industries across the United States.
First tender acceptance (FTA) and route guide depth are two important metrics for route guide performance (RGD). RGD is the average number of tenders per load or how far into a route guide a shipper must tender shipments before carriers accept loads. FTA is a percentage of the frequency with which the first-awarded transportation provider accepts their shipment tenders.
These observations are from the week of February 5-11, and they also reflect RGD from January 2023.
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