Dive Brief:
- Dry van spot rates rose about 20 cents per mile last week over the previous week, as winter weather and storms swept over much of the U.S. and tightened capacity, DAT Principal Analyst Dean Croke said on a market update Tuesday.
- In Texas — where storms led to road closures, stalled supply chains and power outages — long-haul deliveries dropped 36% compared to the previous week, according to data from Omnitracs.
- Croke said most markets impacted by storms saw inbound volumes rise, while outbound volumes fell. In Dallas inbound volumes spiked 54% week over week, while outbound volumes dropped 6% over the same time period.
Dive Insight:
A thawing across the U.S. has restarted freight movement, after transport networks stalled or slowed due to storms.
Trucking firms idled trucks and closed terminals during the icy storms. Railroads shut intermodal gates. Truck stops weren't able to pump diesel, trucks' fuel filters iced up and batteries failed.
"When you get cold weather like this, things start breaking, and that just slowed the entire capacity train down," Croke said.
Respondents in a Morgan Stanley survey noted capacity issues because of winter storms. "The snowpocalypse sapped capacity from the market making capacity extremely tight," one broker said.
The storm effects were particularly evident in Texas, where plummeting temperatures stressed the electrical grid, to the point where millions of residents were left without power for days. Load-to-truck ratios were as high as 5.4 for dry van and 11.9 in reefer in Texas, according to DAT data. And parts of Interstates 10 and 40 east of the Mississippi River were closed and trucks slowed to a crawl, Croke said.
"In Texas, they are not used to this," DAT Chief Scientist Chris Caplice said. "This is brand new weird stuff for them."
Experts said they don't expect long-term freight market impacts due to the storms.
"We expect a rapid bounce back as demand and supply re-adjust based on drastically improved weather, power and road conditions," Ashim Bose, chief data and artificial intelligence officer at Omnitracs, said in an email.
DAT analysts described the weather events as a "blip," in terms of market effect. Caplice said he expects national dry van rates to settle near the end of March.
The phenomenon most affecting the trucking market longer term is not the storm, but rather the same topic of conversation for the last year: The COVID-19 pandemic.
Goods spending has buoyed freight demand, as many consumers cut back spending on services such as entertainment and travel. Total retail and foodservice sales in January were up 7% YoY, according to Census Bureau estimates.
When the country opens up, it's unknown if consumers will shift spending toward services, and if pandemic-driven purchases, from prepared foods to Peloton bikes, will continue their trajectory in boosting trucking demand.
"The question is, will that pandemic demand be there post pandemic?" Caplice said.
