Best Practices predictions trends market analysis SPOT ... · Best Practices predictions trends...
Transcript of Best Practices predictions trends market analysis SPOT ... · Best Practices predictions trends...
Published by dat solutions Spring 2019
Shortcuts and strategies for freight excellence
Best Practices predictions trends market analysis
SPOTFreightPlaybook
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REEFER
1. Atlanta, GA
2. Fresno, CA
3. San Francisco, CA
4. Los Angeles, CA
5. Ontario, CA
6. Philadelphia, PA
7. Joliet, IL
8. Chicago, IL
9. Elizabeth, NJ
10. Dallas, TX
1. Houston, TX
2. Atlanta, GA
3. Cleveland, OH
4. Fort Worth, TX
5. Dallas, TX
6. Pittsburgh, PA
7. Memphis, TN
8. Los Angeles, CA
9. Harrisburg, PA
10. Philadelphia, PA
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FLATBED
1. Atlanta, GA
2. Dallas, TX
3. Houston, TX
4. Los Angeles, CA
5. Ontario, CA
6. Chicago, IL
7. Elizabeth, NJ
8. Memphis, TN
9. Cleveland, OH
10. Charlotte, NC
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DRY VAN
*Busiest lane information based on transactions in DAT RateView, excluding lanes shorter than 250 miles. *Top markets defined by most outbound freight, according to transactions in DAT RateView
Busiest Flatbed Lane:
Houston, TX to Lubbock, TX
Busiest Reefer Lane:
San Francisco, CATo Ontario, CA
Busiest Van Lane:
Atlanta, GA to Lakeland, FL
TOP 10 MARKETS
Matt Sullivan | Editor
The spot market is nothing if not topsy turvy, and the sharp twists and turns we’ve seen in the freight markets over the course of the past 18 months or so are enough to give you whiplash.
Last year we had a rapidly growing economy that was met head-on by the truckload capacity shortage caused by the ELD mandate. Rates set all-time highs in June, but less than a year later, we have a spot market brimming with new carriers.
But if there’s anything we’ve learned in our four decades in the trucking industry, it’s that these ebbs and flows never stop. New carriers lead to extra capacity, which pushes rates lower. Those lower prices push carriers out of business, tightening capacity and adding pressure on rates.
Wash. Rinse. Repeat.
Anticipating those cycles – and reacting to the disruptions of those cycles – is key to any 3PL’s strategy. In this issue of the Spot Freight Playbook, we look at some of the forces driving market trends, the best approaches to securing capacity and introduce the brand-new Trucking Freight Futures exchange.
Trucking transformationsStay ahead of trucking’s fast-paced evolution.
“The most important freight industry development since The load board.”
The trucking industry is 35% bigger than the U.S. petroleum and coal industries combined.
$726BMarket Size
3PLsTo protect their exposure to pricing volatility
ShippersTo mitigate exposure to rate volatility
Financial markets As a tool for clients who wish to hedge or speculate
Who uses Trucking FreightFutures?
Carriers To balance against falling prices
What is the Trucking Freight Futures exchange, and how does it work?
Trucking Freight Futures works just like the futures markets for any other commodities. Companies purchase the futures contracts on Nodal Exchange as a way to reduce the financial risks associated with volatile spot market freight rates. Unstable prices create cash flow issues for trucking companies, so those businesses can hedge against price changes by buying or selling financially settled futures contracts.
Who buys or trades trucking futures contracts?
Market liquidity comes from carriers, freight brokers, third-party logistics providers, shippers, financial firms and commodity traders. Transportation and logistics companies buy or sell a futures contract in anticipation of freight rates moving in an unfavorable direction.
What determines the prices on these contracts?
DAT’s massive spot market index is the industry standard for pricing and is far
and away the best source for assessing which direction rates are moving. The futures contracts financially settle based on daily spot market dry van rates provided by DAT for seven directional lanes that best reflect the market trends for those regions, plus three calculated regional indices and a national average.
How does this change how the trucking industry does business?
It’s the most important trucking industry development since the load board or deregulation. It provides more transparency than the industry has ever had before, and it lets businesses negotiate price with more perspective on future market conditions.
Trucking Freight Futures is a partnership between DAT, FreightWaves and Nodal Exchange.
For more information about Trucking Freight Futures, visit:DAT.com/FreightFutures or FreightWaves.com/Trucking-Freight-Futures
Trucking is undergoing a transformation, as new technologies, e-commerce, ELDs, and economic growth reshape the supply chain landscape and add volatility to the mix. In response, the first Trucking Freight Futures exchange opened in March, offering new opportunities to manage the risks associated with that volatility.
Duty now for the future
Matt Sullivan | Editor
OnTimeFull visibility, no check calls. See every load in real time on one screen.
RateViewThe industry standard in pricing. Spot and contract rates for 65,000 lanes.
not just more drivers. more Freight Market tools.PowerTrucking's largest load board. Find trucks at the right price for every shipment.
Why is DAT the most popular load board for brokers?
Because it's the most popular load board for drivers.
CarrierWatchAvoid unsafe carriers. The best source on authority, safety and insurance status.
BrokerTMSBack-office efficiency. The only TMS built specifically for brokers and 3PLs. DAT.com | 800.547.5417
"ELDs will lead to higher rates"
Spot market prices set record highs in June.
The national average van rate hit $2.31 per
mile. Reefers hit $2.70, and the national
flatbed rate topped out at a whopping $2.82
per mile. For comparison, the average van rate
for June of 2017 was $1.80. Claim: TRUE
"Small carriers won't be able to afford ELDs"
While it might’ve been true that the extra
expense of ELD adoption pushed some carriers
out of business, it wasn’t true for the vast
majority of trucking companies.
A DAT survey found that 91% of small carriers
were compliant with the mandate before April
1, when law enforcement started handing out
fines. Part of the explanation could be that
ELD providers like KeepTruckin offered more
affordable service than first expected and
even offered to buy out contracts for more
expensive ELD services. Claim: FALSE
"There will be fewer trucks available"
This was correct, but maybe not for the
reasons people expected. Spot market
volumes set records in the first half of the year.
Shippers and brokers had trouble securing
capacity, and shipments that would’ve
normally moved under contract fell into the
spot market, so the truck shortages were
because of the demand side rather than the
supply side. Claim: TRUE
"Carriers will quit the industry"
Four months before the ELD mandate, DAT
surveyed 645 TruckersEdge customers, mostly
small carriers and owner-operators. Thirty
percent said that they would leave the industry
rather than use an ELD.
Some carriers did leave, and others went
out of business. But they were the exception
rather than the rule. In fact, the number of
active carriers grew at a faster pace after the
mandate went into place, with high rates
inspiring many company drivers and leased-on
owner-operators to get their own motor carrier
authority. That trend could reverse with lower
rates. Claim: FALSE (For now)
ELDs were in every conversation in the freight business in 2018. We separate fact from fluff in this exclusive retrospective.
Matt Sullivan | Editor
Whose predictions came true, Who missed the mark, and
What to watch for.
The great ELD SCARE
Fear VS fact
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AOBRDs
Trucks using Automatic On-Board Recording Devices, or AOBRDs, that were previously exempt are required to switch to ELDs by December 16 of this year. Many large fleets have been using AOBRDs for years and have yet to make the switch.
Hos ReformFMCSA hosted listening sessions in March 2018 to hear directly from drivers about hours of service rules, and in August the agency asked for input on changes to rest breaks and split sleeper berth rules. A proposed rulemaking regarding those changes is expected in the coming months.
Minimum wageSeveral states have new minimum wage requirements this year. TCA legal counsel notes: "Employers with operations in different states must take care to monitor these various state law requirements ... because carriers are often targeted with wage and hour lawsuits brought by drivers and other employees."
California lawsThe state supreme court set criteria that define whether a leased-on owner-operator is an independent contractor or employee, plus FMCSA announced that carriers are exempt from the state's meal and rest break requirements.
Drug TestingThere are two driver drug testing regulations that could further shrink the already-tight pool of eligible drivers. Full compliance with the Drug and Alcohol Clearinghouse is required by January 2020. Also, the current transportation funding bill calls on the FMCSA to issue a rulemaking to permit hair follicle testing as an acceptable alternative to urine testing, after the Department of Health and Human Services issues guidelines.
Last year, the ELD mandate dominated the regulatory news. But there are several other regulations on the horizons that transportation professionals need to keep an eye on.
5 Regulations to watch in 2019
ROAD RULESPat Pitz | Senior Reporter
Source: American Transportation Research Institute
Driver shortage
Hours of service
Driver retention
ELD mandate
Truck parking
Compliance, Safety, Accountability
Driver distraction
Infrastructure, Congestion, Funding
Driver health and wellness
Economy
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Top 10Issues facingThe industry
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Featuring acclaimed speaker Jack Uldrich, author of Foresight 20/20.