As anticipated, load demand was down in February versus January.  This is not expected to become a trend as a KeyBanc Capital Markets analyst reports “…inventories relative to sales remain at the lowest levels since late 2014, potentially driving restocking in coming months.”  Driver availability remains a challenge.  The latest news on U.S. trade policy introduces additional uncertainty regarding near to long term demand.

Truckload capacity in February is less restricted than January but still much tighter than a year ago.  Capacity on the west coast and in the upper mid-west is relatively loose compared with the rest of the country according to spot board postings.  We are expecting a shift to tighter markets as home improvement season begins and as the ELD enforcement is implemented.

Load volumes continue to increase at a greater clip than available truck capacity – keeping spot rates higher than a year ago.  We are quickly approaching the spring peak, so while trucks availability has improved compared with January, tighter capacity is likely after mid-March.

Tight capacity industrywide continues to reflect the combination of accelerating economic activity and the lack of driver availability.  Spot pricing remains high and substantial contract rate increases have been reported to support higher driver wages.  Additionally, the enforcement of electronic logs in early 2Q18 could restrict capacity further.

The perfect storm continued into January 2018 with constrained capacity and carriers showing confidence in obtaining rate increases that will stick.  January spot rates were up 35% versus 2017 and contract rate increase percentages are still expected to land in the mid to high single digits for this year.  Carriers are taking advantage of bid season to cover anticipated driver wage increases and productivity losses.

Although we are seeing capacity loosen some as we near February (+8.3% week over week), overall truckload capacity tightness has extended into late January.  Two unusual circumstances this month:

1. The ELD mandate became required in mid-December, and many drivers were either unprepared or uncooperative. 

2. The gift card effect has become more prevalent for retailers – extending holiday shopping into the new year. 

We expect rates to press higher as bid season progresses and contract rates are renegotiated.