DAT Weekly Trendlines Report – Reefer Rates Lose Traction Due to California Heat Wave

Spot rates are trending down for refrigerated (“reefer”) freight, due paradoxically to hot weather in Southern California. Temperatures in the “fry eggs on the pavement” range, above 115 degrees, ruined some high-value crops, notably avocados. Other parts of the state were also affected, adding to a typical mid-July decline.

One result was a decline in the national average rate for reefers, now $2.65 per mile for the month to date. That’s $0.04 below the June average. To put this in context, June rates hit an all-time high, so July still looks pretty daunting.

If you’re hoping for rates to decline further, take heart. The national average load-to-truck ratio dropped another 7 percent last week to 8.3 loads per truck, compared to 13.1 for June.

As produce season wanes in California and across the South, demand for reefer equipment typically shifts northward, to accommodate late summer harvests in the Pacific Northwest and Upper Midwest. Markets to watch include Twin Falls, Idaho; Green Bay, Wis.; and Grand Rapids, Mich., where rates rose last week on a selection of high-volume, outbound lanes.

Reefer rates dropped back to $2.65 per mile as a national average for the month to-date, in the week ending July 21. It’s the third week of declining rates, but the national average is only $0.05 below the all-time record set in June. The load-to-truck ratio declined to 8.3 loads per truck, which indicates that rates are likely to continue the downward trend this week. Capacity remains tight in some key markets around the country, as a seasonal transition is underway.

NOTE: The map depicts outbound load-to-truck ratios for reefer. The load-to-truck ratio represents the number of loads posted for every truck posted on DAT load boards. The ratio is a sensitive, real-time indicator of the balance between demand and capacity. Changes in the ratio often signal impending changes in freight rates.

For more details on spot market capacity and rates, visit DAT.com/Trendlines