The pressure to restock grocery stores and distribution centers stripped by COVID-19 buying has quickly given way to a slump for truck freight. As March segued into April, the spot market took a tumble, according to figures from DAT Solutions and Truckstop.com.
“We knew that the day would come when the broader destruction of freight demand would become a bigger issue for the truck freight spot market than the upward pressure on the market due to disruption and the need to restock depleted grocery shelves,” FTR wrote in a Spot Market Update April 6 featuring Truckstop.com data, noting that “all equipment types are seeing a broad collapse in freight volumes.”
DAT’s Trendlines published April 7 noted that van rates fell last week, following a sharp decline in load-to-truck ratios. “Consumers stayed home, making it less urgent to re-stock grocery store shelves. At the same time, businesses deemed ‘non-essential’ slowed or stopped freight shipments, reducing demand.”
As DAT’s Peggy Dorf noted in the DAT Rate Trend of the Week blog, “We saw it coming, as load-to-truck ratios took a nosedive during the previous week, but it’s still painful for anyone in transportation and logistics.”
Carriers had enjoyed sky-high demand through late March, she explained, as consumers cleared store shelves of cleaning supplies, paper goods, and non-perishable food products. That demand continues, but it is offset by widespread closures of manufacturing and distribution operations for goods that are deemed non-essential during the COVID-19 crisis.
FTR explained that although some spot freight segments, especially flatbed, had already seen a decline in loads, last week all segments were weaker in terms of load availability, rates, and the Market Demand Index, which is the ratio of loads available to trucks available in the Truckstop.com system. Meanwhile, truck availability was higher in all segments.
“The demand destruction is not especially surprising given that nearly 10 million people have filed for unemployment benefits over the past two weeks, but it is remarkable how quickly the pressure to restock grocery stores and distribution centers gave way to a slump for truck freight,” FTR noted.
On a percentage basis, FTR said, Truckstop.com data showed the biggest drop in loads was in refrigerated, which plunged 39.4% after a 37.9% drop the week before. Flatbed load availability plummeted 34.6% after falling more than 30% the week before. Dry van spot loads, which had basically held up through the previous week, fell 31.5%. Specialized dropped only about 20%.
Spot rates for van freight dropped sharply last week in the Truckstop.com data, FTR said, as the dry van broker-posted rate per mile (excluding fuel surcharge) fell 10 cents, and the refrigerated rate plunged 21 cents. Flatbed spot rates were down nearly 6 cents a mile and specialized rates decreased nearly 4 cents.