North American Freight Market Insights

TOP STORY: Truck driver appreciation week

We are saying thank you. National Truck Driver Appreciation Week began Sunday, September 11. We’re counting on you to help spread goodwill by thanking all truck drivers—both domestic and marine drayage drivers—for delivering just about everything we use in our day-to-day lives. C.H. Robinson is celebrating drivers through September 23, and in addition to giving drivers the credit they deserve, you’ll have the opportunity to help deliver charitable donations and giveaways just by saying thanks.

• We are giving away a total of $100,000 to carriers as part of our driver appreciation sweepstakes.
• In addition, we are making a $5 donation to the St. Christopher Truckers Relief Fund for every post that uses the hashtag #ThanksForEverythingLiterally, on LinkedIn, Twitter, or Facebook.

Drivers keep the global supply chain, and everything in it, moving. Join us this week in celebrating truck drivers and thanking them for everything. Literally. Please help say thank to truck drivers.

As mentioned previously, normal in trucking is the constant evolution of the truckload market. We opened with some insights on the five-year average of the spot market and the performance of the contract truckload market at pre-pandemic levels. Now, we will shift our focus to today's truckload market with information regarding national averages and regional experiences.

As reported last month, the spot market volume decline coincided with the return of drivers from COVID-19 in the first quarter. Like any market, there is some week-over-week change in spot market volumes, but the pattern of change has narrowed since approximately week 13.

Truck postings have varied week over week and are slightly higher today than earlier in the year. Accordingly, the spot market then corrected itself and continues to offer a load to truck ratio (LTR) at the five-year average with only minimal variation since week 13. This is most evident in both the dry van and refrigerated segments.

Continuing with our narrative, can 'normal' be defined as the spot market (van and reefer) performing at five-year averages? Below we offer national 2022 LTR averages by week with five-year average comparisons, displaying the regional variances within a national average.

Dry van is the largest segment of the truck market. It is performing well in most markets across the country. Most recent weeks it has posted an LTR slightly below the five-year average, which is an elevated average because of the 2020 and 2021 markets.

While the 2022 fresh produce harvest season was somewhat muted in the key growing markets (when compared to previous produce seasons), the national average continues its pattern of the five-year LTR.

Today's flatbed spot market offers plentiful capacity in most markets with a load to truck ratio of about 15:1, well below the historical average of 26:1.

Regional LTR averages

Regional perspectives can help you plan for optimal market performance. Illustrated below are LTR at the point of origin for the week of September 4–10. Note the different ranges of LTR by each of the three truckload services. Some lanes from an origin may perform better or worse than the LTR might indicate. Our research and experience confirms that an origin-destination pair can have more or less attractive features to the capacity market than the regional average tension might indicate.

Dry van is displaying a great deal of yellow (3.4 to 6.9:1 LTR) with a national average of 3.6:1. Of note, Pennsylvania has been experiencing significantly greater tension for several weeks in a row.

The national LTR at the five-year average between 7 and 8:1 is showing some greater tension in the Midwest because of harvest season for fresh produce.

Today's flatbed spot market LTR of ~15:1 shows meaningful tension in the Southeast.

Most (75%–85%) of the United States’ for-hire truck market is moved through commitments most often managed via hierarchical route guides and dedicated truckloads. In 2021, the percent of freight in the contract market was on the lower side of this 10% variation.

With freight volumes settling, and the apparent migration of talent and assets to larger carriers in 2022, it’s likely the percent of freight in the contract market will increase.

Companies commonly use waterfall (or hierarchical) route guides to manage awarded freight on lanes with some level of demand pattern predictability. The following insights are derived from TMC, which offers a large portfolio of customers across diverse industries throughout the United States.

Two key metrics of route guide performance are first tender acceptance (FTA) and route guide depth (RGD). RGD refers to how far into a route guide a shipper must tender shipments before carriers accept loads, or the average number of tenders per load. FTA is a percentage of how often the awarded primary transportation provider accepts their shipment tenders.

These insights are from the week of September 4–10, 2022, and also reflect the RGD from the month of August.

The regional view continued to show the Northeast displaying the most challenging RGDs. With a national average RGD of 1.25 the week of September 4–10, which was an improvement from 1.34 in July and settling into a pattern. The Northeast pattern continues with the highest RGD, with August's figure being influenced by Maine and Vermont—and most recently Pennsylvania, the other two states settle back.

Broadly speaking, route guides are performing well, with primary service providers accepting loads, at or near pre-pandemic levels, and the first backup provider accepting rejected tenders most of the time.

As a side note, the companion spot market for dry van saw the Northeast and Midwest regions produce the highest load-to-truck ratios last week at 7.3 and 5.5 respectively, by comparison the other regions were in the mid-threes. So, the spot and contract markets are showing the same top-tension regions.

This is much improved from the lowest pandemic point of January 2022, at 79% and showing continued improvement month over month. Load tenders that are rejected in today's market tend to be those that are unattractive to carriers for one reason or another, such as:

• Low volume or variable demand patterns that make predicting the tender and preassigning capacity difficult.
• Historically long dwell events at the origin and/or destination.
• The price is below market for loads with unattractive attributes, requiring a price above market to offset the issues with the load.

It is helpful to watch both FTA and RGD metrics. The contract freight market as displayed in these metrics is seemingly back to pre-pandemic performance. Additionally, with the spot market LTR performing around the five-year average since week 13, it seems today's freight market has stabilized.

For August, all three distance bands experienced improvement in RGD as secondary providers increasingly accepted the primary provider’s rejections. Information from the week of September 4, and pre-pandemic comparison, offers additional perspective:

• Low volume or variable demand patterns that make predicting the tender difficult and preassigning capacity.
• Historically excessively long dwell events at the origin and/or the destination.
• Price is below market for loads with unattractive attributes, requiring a price above market to offset the issues with the load.

U.S. spot market dry van truckload rate per mile insights

Below is the C.H. Robinson 2022 truckload dry van spot market cost-per-mile index without fuel. Like others, this forecast has been, and will continue to be, amended as the economic forces shape freight volumes and the capacity community responds.

• The dark blue solid line is DAT's cost per mile to carrier without fuel.
• The blue dotted line is the C.H. Robinson forecast, bounded on the bottom by the estimated cost per mile to operate a truck.
• The revision for August brought the bottom of the market up a bit with July historical information applied.

When looking at previous market cycles, the cost per mile to operate a truck has been the bottom of the market. Then supply tends to contract, creating tension and pricing inflection. The length of time a market is at the bottom varies by the economic conditions and the level of oversupply.

For perspective, the 2022 spot market forecast further illustrates that point. Analysts have offered 2022 contract pricing forecasts between 8–9% year over year (Y/Y) without fuel as carriers work to recover increasing operating expenses, against optimized multi-leg routes from route guide awards.

C.H. Robinson will continue to apply its broad market costs and market experience to the forecast and continue to present updates on a regular cadence.

Diesel pricing outlook

The graph below from FTR Transport Intelligence, illustrates that diesel pricing, plotted from the EIA forecast, will slowly decline—but stay above $4/gallon through 2023. Of note, the current drop of diesel retail pricing is below the long term EIA forecast, but it does reflect a more dramatic drop in cost per gallon than previous months.

The national average price per gallon of diesel has declined week over week. The EIA posted $3.47/gallon on September 5. For the week ending August 8, 2022, it was at $4.99. The illustration shows the current EIA long term forecast and expected downward trend toward the $4/gallon range in 2023. Should the current pricing level persist, it seems reasonable the EIA will further revise the long-term forecast.

With the forecasted decline in diesel pricing, the levels are still exceedingly high historically and will continue to be an increased cost for carrier operations where fuel surcharges don't cover repositioning miles, idle time, or out-of-route miles.

C.H. Robinson has two customer communities—shipper customers and carrier customers. What follows are insights from conversations with carriers of all sizes to offer perspective into their top concerns over the past month. Below is a summary of the reoccurring themes.

Market

• Larger carriers for the most part are staying out of the spot market
• Dwell time is becoming more of a hot-button issue, multiple carriers brought this up as a significant pain point

Equipment

• Part availability continues to be an issue for carriers along with limited service from roadside assistance
• The used tractor market continues to be strong with much elevated pricing returning to pre-pandemic levels

Drivers

• Recruiting and staffing continues to improve as application volumes increase
• Driver retention is improving

Imports and inland transportation

Places where the global supply chain meets North American supply chains—like ports and airports—are also affected by the cyclical market and other disruptors. Here is a look at top influencers impacting imports.

West Coast and rail labor negotiations

• The rail labor negotiations will impact import and export services. Please see our intermodal section below for the latest insights.
• The current agreement between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) ended on July 1. Talks often go past the agreement expiration date. However, this year, both parties insist that normal operations will continue until a new agreement is reached, avoiding any interruptions.

East Coast and Gulf congestion
Schedule reliability will remain poor because of port congestion. New York/New Jersey Terminals, Savannah, Georgia, and Houston have been hit with severe congestion in quarter three and will most likely continue as moving through quarter four.

Dray carrier hours of service exemption continues
An emergency exemption to U.S. truck driver hours of services (HOS) rules, in effect since March 2020, was extended until October 15. The HOS exemption, which expired August 31, allows truck drivers hauling certain supplies to exceed the restrictions limiting them to 11 hours of driving time per day. The HOS exemption is likely to continue to be extended beyond October as the Biden administration prepares for a new surge in COVID-19 cases.

Dray capacity notes
Charleston, South Carolina, Savannah, and Jacksonville, Florida, carriers are seeing and influx of long haul drivers seeking local drayage work opportunities. While some of these drivers are familiar with drayage some are not and there is a learning curve with the newer owner operators.

Chassis deficits are rising:

Here are some of the more problematic areas:

• Cleveland and Columbus, Ohio: Chassis deficits are increasing because of a rise in volumes over last quarter and a reduction of chassis because of repositioning earlier this year. Plan for export delays related to the fumigation for the Brown Marmorated Stink Bug.
• Memphis and Nashville: Chassis is near 100% usage and dwell is now at about 3–4 days.
• Chicago: Long street times on chassis have resulted in dwell at the rail of 5–6 days and low access to chassis.
• Minneapolis: Longer than normal wait times and chassis shortages continue.
• Kansas City: Turn times on chassis are exceptionally high with 40/45' experiencing the greatest limitations on chassis.
• West Coast ports: Much improved regarding vessel back up and chassis availability.

Airport operations

While recovery times at U.S. airports remain elevated relative to pre-COVID-19 conditions, we are seeing fewer extreme delays as demand has softened.

For an entire portfolio of insights, visit our Global Freight Market Insights or contact your C.H. Robinson account manager.