Rates have been skyrocketing in the transportation industry since last summer, resulting from a surging economy and compounded by a shortage of drivers and capacity. Since trucks move 70% of the nation’s freight volume by weight, a tremendous amount of businesses have had their bottom line impacted, just about any business that ships freight on flatbed trailers. Shipments can be delayed, affecting manufacturing and production and even customer satisfaction.
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The current robust manufacturing environment in the U.S. has been a major contributor the rise in flatbed demand. The pending tariffs on imported steel and aluminum, outlined in the Section 232 reports to President Trump in January 2018, may continue to expand our economy in the coming years. With a stronger economy, manufacturing and industrial businesses are experienced increased activity in their customer bases, resulting in higher sales and profits. However, there will also ber a greater need for transportation to ship these orders. Additionally, the new tax breaks for capital expenditures means more flatbeds will be needed to haul machinery and other equipment. If the infrastructure bill gets passed, more construction materials will be needed at locations where bridges and roads are being built.
Another contributing factor to overall truckload capacity, the recent electronic logging device (ELD) mandate tightened the controls around Hours of Service (HOS), forcing greater compliance with already existing HOS regulations. The HOS rules limits truckers to driving no more than 11 hours a day within a 14-hour workday, so what was once considered a one-day trip, for example, could easily turn into a two-day overnight due to the magnified scrutiny that goes hand in hand with the ELD mandate. Drivers must then be off duty for 10 consecutive hours, intensifying a carrier market that is already short on drivers.
Carriers have been turning down loads throughout the first half of 2018 and desperate shippers are paying two to three times the market price to secure capacity. In December, DAT reported a van load-to-truck ratio of 9-to-1, the highest in its history. In comparison, flatbed loads were running at 18-to-1, meaning that for every flatbed truck there are 18 loads the truck can pick up. Trucks.com reported that in April there was only one flatbed truck available for every 111 loads that needed hauling.
Accordingly, the spot rates for flatbeds are at an all-time high of $2.63 a mile. The flatbed market is seeing the highest level of demand and the tightest capacity ever. DAT explains one of the reasons: “Typically, the load-to-truck ratio is highest for flatbeds, followed by reefers, and then vans with the lowest ratio of the three. That’s because it’s hardest for brokers to find the right flatbed equipment, and there are more vans available than flatbeds and reefers combined.”
One way to help find capacity at decent rates is to use a specialized transportation procurement platform that can grant shippers access to a vast, global network of onboarded and pre-vetted carriers. Once you contract with a carrier and find them satisfactory, nurture that relationship so that if you have another flatbed load to ship, you’ll be able to secure capacity with that carrier.