Weakening spot market rates and skyrocketing fuel costs in March overshadowed strong truckload freight volumes and record-high prices for loads moving under contract, according to DAT Freight & Analytics.
The price to move van freight under contract increased 19 cents to $3.28 per mile as a national average, eclipsing the previous high set in February. The average contract reefer rate was $3.45 a mile, up 20 cents, while the flatbed rate gained 24 cents to $3.69 a mile.
“What made March unique is that shippers paid historically high prices to ensure that more of their loads moved under a longer-term contract, reducing their need for trucks on the spot market and causing rates to soften,” said Ken Adamo, DAT’s chief of analytics. “At the same time, carriers’ operating costs increased because of higher fuel prices. As a national average, fuel cost $1.07 per gallon more in March compared to February and $1.95 a gallon more year over year.”
The national average for a gallon of on-highway diesel currently sits at $5.10, according to the U.S. Energy Information Administration. The Gulf Coast and Midwest are the only two regions where the average is under $5, and Californians are shelling out $6.25 per gallon.
Tim Denoyer, ACT Research vice president and senior analyst, said he believes the roughly 15% drop in truckload spot rates, net fuel, since January is the reflection of the Omicron effects that tightened capacity a few months ago, "combined with ongoing progress on the hiring front. A few points are also due to the inability of the spot market to pass through higher fuel prices, leading to an extraordinary hit to rates, ex-fuel.”
On the spot market, the national average van rate in March fell to $3.06 per mile, down 3 cents compared to February, while the spot reefer rate was $3.44 per mile, down 9 cents. The flatbed rate was $3.45 per mile, up 26 cents month over month and a new record. Removing the surcharge, the spot van rate fell 21 cents last month to an average of $2.42 a mile, and the reefer rate slid 28 cents to $2.74 a mile. The flatbed rate rose 5 cents to $2.68 a mile.
Small trucking companies and independent operators experienced significantly higher operating costs and lower revenues than they’ve become accustomed to over the past couple of years, said Adamo.
