DAT Freight Market Update with Dean Croke: Episode 36

Dean Croke: Hi everyone, welcome to the DATIQ show. This is our market update for September 14. here we're looking at some of the old school gas pumps from last century. I spotted some of these at the Barrett Jackson Car Collector auction in Las Vegas last week. these early 1900s visible gas pumps are quite amazing. and for those that don't know, that big glass chamber at the top is what they call a graduated measuring cylinder. And that let the customer know exactly how much gasoline was being purchased. And of course, if you needed more than ten gallons, which was the maximum, the attendant would fill up the cylinder again. naturally these were gave way in fact to electric pumps and mechanical meters by about the nineteen thirties, I'm told. but just fascinating to see them at the Barrett Jackson car auction. it's had some wonderful collection of exhibits there, but this one really got my attention, especially the old school Coca-Cola dispensing machines that I can remember from my childhood in Australia. but talking of fuel, there's really only one subject on everyone's minds this week and of course that's diesel. it's one trend that I'm watching very closely. Diesel hit an all time record over the weekend. I'm not sure where it goes this week, but I look at the pilot flying J truck stops national average as the best proxy for long haul spot carriers and what they're paying retail. Of course, you've got to take the fuel discounts off that 647 that it hit over the weekend. it's up $2.17 or 50% since the war started in late February. Triple A also confirms from a separate data set retail diesel crossed six dollars for the first time ever last week. Sitting at about 616, up 66% a year ago from their data set. diesel's increased substantially. the recent escalation of h hostilities late last week is particularly concerning. It really feels like we're at a whole new level of war hostilities in the Middle East. And I think we're about to see another surge in fuel costs, even though diesel was up thirty-four cents just last week alone. There was some regional differences. Southeast played catch-up. Georgia roughly increased about 40 cents. Florida up 16. the Southeast really was the one that caught up the most, I think. West Coast and Northeast held flat at levels they were already at prior. So the spread across the country, though, for truckers is stunning. driver in Southern California is paying more than $8.30 a gallon, while in Kansas they could be paying under $5.50. So it's nearly a three dollar spread for the same tank. So where carriers fill up is absolutely critical these days. but if you look at the the math for a small truck running hundred thousand miles a year, today's prices have added about thirty-one thousand per year to the operation of a truck in terms of fuel costs compared to pre-war. but to be more precise, if you look at how many miles a truck's run, if you just say a spot market dry band's running eighty, three hundred miles a month since the war started, that means that truck would have spent about $8,500 more on diesel in the last seven months. of course fuel surcharges up. it based on the EIA average of five ninety seven last week, I think on Tuesday when it comes out it'll be well north of six dollars, setting a new record for the EIA weekly average that the fuel chur surcharges set off. Late last week the fuel surcharge was at seventy nine cents, up eighty four percent since the war started. back in late Feb, the fuel surcharge for dry band was 43 cents. I had carriers ask me last week if it's time to get out. And it was a really interesting question. I didn't think that would happen that soon. Clearly, higher diesel prices are putting the squeeze on some carriers. I'm seeing a repeat of 2022 where online chats and work stoppages, protests and blockades are gathering momentum in the trucker network. one very popular social media post went viral this week mentioning the carrier in b in concern was parking his regional dump truck fleet because it was just uneconomical to move them out of the garage. So this is interesting times. We're starting to see carriers become very concerned and quite restless about where things are going. we'll see what happens this week. This week could be very telling, I suspect. Let's have a look at the spot market, dry van rates and seasonality. spot rates for dry van, these are excluding fuel and for loads over 250 miles, came in at 220 a mile this week, down a penny, still up 56 cents a mile a year ago. If you look at the shaded area in the background, that's the nine-year average, which is about 181 is the average there. We're at the top of that historical range. Bellwether States came in at about 294. down a penny or so. In the reefer market, we saw line haul rates down about two cents also. Spot rates averaged 271 last week, still sitting 35% or 70 cents a mile higher than where they were a year ago. Against the nine-year seasonal band that we track, that level of 271 puts rates up 27% or about 57 cents a mile. The reefer bellwether states came in at 364, down three cents. Quick update on the produce market. if you follow me on LinkedIn, you would have seen this report late last week. I write a lengthy article about what's happening in the produce market, but it really was split in two last week. Almost everything sat still except Washington tree fruit, which took off. Of course, we're talking apples and pears. Yakima into Miami, busy lane jumped twenty-six percent on the week to twelve five or twelve or thirteen five per load. That's about thirteen thousand five hundred. That's a pretty big jump. up 67% compared to last year. out to LA, new crop apples and pears are running 118% over a year ago. That's the one origin with real momentum right now. What's important, I think, for everyone here is that we're only halfway through the season and rates are climbing to a four year high already, suggesting reefer capacity is very tight even before we get into the early October peak. And then of course once we get there, we're in a Christmas tree season. So Four produce shippers are going to have to pay a premium, I think, this year, all the way through Thanksgiving by the look of it. California was a different story. volume's cool there. we didn't see a lot of movement week over week. out east, melons are winding down. the Delaware, Maryland in Chicago lane slipped a couple of points, so no surprise there. Bedallier onions didn't move a dollar. South Texas crossings were flat. bottom line, this market in in produce is sitting well above a year ago, but the weekly energy has left the building, except anywhere up in the Pacific Northwest. Keep an eye on that one. Let's have a look flatbed seasonality spot rates averaged 262 last week, down five cents week over week, but still sixty-six cents a mile higher than a year ago. Bellwether states came in at 317, down 13 cents on the week. Let's have a quick look at our forecasts. ratecast is telling us that the thirty-five day look out to the middle of October for ratecast is going to have us landing at about two twenty a mile by mid-October. Confidence band to plus or minus eight, a little bit wider than we've seen in the last few weeks, which was at about seven cents a mile confidence at the widest end. that forecast will sit rates about fifty-two cents a mile higher than a year ago when they were above sixty-eight. All right, reefer market, we're looking at reefer landing out in mid October by about two sixty-five inside a confidence band range of about six cents, a little bit tighter. forecast sits about fifty-seven cents a mile above a week a year ago, when it was two eight. And lastly, in flatbed, our thirty-five day has flatbed landing at two fifty nine, a confidence range of about six cents. So it's a bit the same sort of tightness as the reefer forecast. The forecast sits fifty-four cents a mile above where it was a year ago. When fleet ARIFA rates, you can see on the back left there, were back around 205 a mile. All right, so that's the market update for this week. Labor Day pulled some volume down on both sides. Supply picture is the through line here. Capacity is still well above last year on our load board. but I do think that the talk of higher interest rates could have an impact on demand. I'm not sure we're going to see demand destruction, but diesel prices, if they go higher and start to get up in the that seven dollar per gallon range, I think we're in serious trouble of seeing some big impact on the demand front. But we've got a ways to go to see whether we get there. All right, before we wrap, this week's guest on the Freightline podcast is Dr. Alex Leslie from Atri, talking about the twenty twenty six analysis of operational costs of trucking. you can also catch me on the Dan Degan I'm All In podcast. Also check out Rates and Lanes with Chuck Snow and Rico Mohammed on Tuesday nights at 7 p.m. Don't forget Jimmy Max's got a new show out called Gage Illuminations on YouTube. It's a fun look at the news in trucking. I'll be on with him on Thursday. Of course, we're at the DAT Shipper Summit in Atlanta. this week and then I'm over at the McLeod conference. So is David Scanlon and others from DAT. Then I'll be speaking at the CBTA conference in Dallas on Thursday. It's going to be quite a travel week, but then it is travel season with conferences that is make sure you set up alerts for our show. If you're new to the show, hit that bell. Make sure you subscribe and don't miss another episode. If you want a a long form version of this report, send me a note on LinkedIn with your email address and I'll add you to the distribution list. So you can get a copy of the charts and some of the deeper analysis. We'll be back next Monday with another freight market update. Thanks for watching. Stay safe and be nice to everyone out there.