The trucking industry has seen a positive turnaround due to increased spot market rates and freight demand. As we mentioned in a previous blog, our load board partners noted that June saw some bounce back after the significant declines the industry faced in April and May due to COVID-19. And, while we typically expect rates and demand to drop off for July and August, spot freight has continued to its upward trend.
In August, the industry observed dry van, refrigerated, and flatbed spot rates all increase from year-over-year rates. The interesting thing to note about these increases, however, is that they are likely the result of a demand-driven response that is also combined with capacity.
Here are the national average spot truckload rates for August from a recent Fleet Owner article:
- Van: $2.20 per mile, 17 cents above the July average
- Flatbed: $2.28 per mile, up 8 cents
- Refrigerated: $2.43 per mile, up 13 cents
Let’s look more deeply into why demand and spot rates have risen in the past month.
States have been reopening at different rates and the coronavirus has also hit these states at different speeds. Understandably, this has led to unprecedented upturns and downturns in manufacturing output and consumer demand. It’s this rollercoaster of activity that has contributed to an increase in demand for spot freight as carriers scramble to meet capacity.
Stay At Home orders have also meant carriers have had to make the shift to service the increased demand in the retail sector rather than the commercial sector as more and more people are choosing to stay at home instead of going out to restaurants.
Tropical Storm Isaias and Laura
If the uncertainty brought on by the pandemic wasn’t enough, the East Coast freight markets were swept up into even more uncertainty due to Tropical Storm Isaias and Laura. The storms left a trail of destruction along the entire I-95 freight corridor. However, our broker partners did report increased load board activity in August due to increased demand for emergency supplies, food, and water.
It will be interesting to see if this prolonged demand continues through to the end of the year, especially as we make our way towards the holiday season. What do you think will happen with freight rates and demand?
Be sure to check out our blog for more trucking industry news and trends from the team at Thunder Funding!