Executive Briefings

Mid-November Van Rates Signal Capacity Constraints in Spot Market?

Last week, TransCore reported October presented opportunities for shippers and brokers on the spot market, based on declining spot market rates.  But this good news came with a prediction:  this won't last long.  We regret to report it appears we were right.

Van rates appear to be heading up on the spot market in the first half of November, following a $0.01 decline in October. This is an unexpected twist, because spot market van capacity has been increasing since early October, while freight availability is stable. Rates typically decline under those circumstances.

Van rates slipped to $1.27 in October, compared to September.  On a year-over-year basis, spot market rates were up by $0.15 (13.4 percent) for the month of October, according to TransCore's Truckload Rate Index.

Spot market rates are paid to carriers by freight brokers and third-party logistics (3PL) companies. These rates are more dynamic than contract rates, which are typically paid by the shipper directly to the carrier, and remain in effect for a longer term.

All freight rates are expected to rebound in 2011, as capacity constraints will cause rates to be more sensitive to any future increase in demand.

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Last week, TransCore reported October presented opportunities for shippers and brokers on the spot market, based on declining spot market rates.  But this good news came with a prediction:  this won't last long.  We regret to report it appears we were right.

Van rates appear to be heading up on the spot market in the first half of November, following a $0.01 decline in October. This is an unexpected twist, because spot market van capacity has been increasing since early October, while freight availability is stable. Rates typically decline under those circumstances.

Van rates slipped to $1.27 in October, compared to September.  On a year-over-year basis, spot market rates were up by $0.15 (13.4 percent) for the month of October, according to TransCore's Truckload Rate Index.

Spot market rates are paid to carriers by freight brokers and third-party logistics (3PL) companies. These rates are more dynamic than contract rates, which are typically paid by the shipper directly to the carrier, and remain in effect for a longer term.

All freight rates are expected to rebound in 2011, as capacity constraints will cause rates to be more sensitive to any future increase in demand.

Read Full Article