Demand Drops for Dry Vans as More Americans Shelter at Home

By Peggy Dorf, DAT Solutions

Demand for dry van equipment continued to slide last week, along with rates. We saw it coming, as load-to-truck ratios took a nosedive during the previous week, but it's still painful for anyone in transportation and logistics.

Spot market participants had enjoyed sky-high demand through late March, as consumers cleared store shelves of cleaning supplies, paper goods, and non-perishable food products. That demand continues, albeit at a slightly less frenetic pace.

Now, however, the surge in grocery loads is offset by a dearth of industrial freight. Widespread closures of manufacturing and distribution operations have decimated volumes of goods that are deemed non-essential during the COVID-19 crisis.

Bumpy Roads Are Still Ahead

Unfortunately, the past week may well be a preview of our future, at least in the short term. The coming weeks or months will continue to be confusing and difficult for the transportation industry overall. And that's only the business side. There's also the underlying fear we all share, that we or our loved ones could become seriously ill.

Sorry to be such a downer, but last week, even the good news wasn't all that good. Rates rose on a handful of high-volume lanes, but not by much. The biggest increase on a roundtrip was the lane pair between Seattle and Medford, Ore. The southbound leg paid 8¢ more last week at $2.58, and Medford to Seattle gained 11¢ to $2.89. The Medford market covers a lot of territory, so it could be hard to load a carrier in both directions without some deadhead. That will have an impact on rates, so keep an eye on market conditions at the destination as well as the origin.

DAT's Hot Market Map depicts tepid demand for spot truckload transportation in most of the U.S.

The majority of high-volume lanes had lower rates last week compared to the two or three weeks before it. Some lane rates fell by a lot. Van loads leaving Atlanta lost traction last week, as did lanes that connect freight hubs of Charlotte and Memphis to Atlanta and to each other.

In summary, last week’s van freight reminds me of that old joke about two restaurant patrons who complain about the food. The first says it tasted terrible, and the second one chimes in: "and the portions are so small!" That was last week in a nutshell: the loads were terrible, and there weren't enough of them to go around.

We know this crisis won’t last forever, but it could be a while until the situation improves. For now, truckload volumes and rates may get worse before they get better.