Reibus: Flatbed, dry van rates ticked up post-hurricanes

After closing the third quarter -3.84% on a year-over-year (y/y) basis, our first look at fourth quarter flatbed spot rates puts us virtually flat y/y, coming in at -0.68%.

In October, rates increased 2.5% from September, which is likely a side effect from Hurricanes Helene and Milton. We will watch to see if the upward pressure on spot rates continues in Q4. Our spot flatbed rate forecast for Q4 has rates staying relatively flat, in line with historical seasonal trends. Looking ahead to the first half of 2025, we start to expect rates for all modes to begin to trend upward.

On the dry van side, spot rates also ticked up 2.5% in the post-hurricane aftermath. Unlike flatbed, seasonal dry van demand sees an increase in Q4 as retailers stock their shelves prior to Christmas. It is entirely possible that we see dry van rates continue to increase, at least out of heavy import markets, in Q4.

Contract rates are still about 5% higher than spot rates, with the spread varying in certain markets. There are a lot of RFPs taking place this time of year and we expect contracts rates for all modes to continue falling as large shippers reset their network pricing. As we have highlighted, contract rates tend to follow spot pricing trends on a lagging basis. So until we see marked increases in the spot market, we can expect contract pricing to remain relatively flat to negative. We will find out in a few weeks whether or not things will begin to pick up once the U.S. election is decided, and shippers remain optimistic about a demand rebound in 2025 and 2026. The IRA, CHIPS and Science Act, and Infrastructure and Jobs Act should all lead to an increase in flatbed shipments.

For the most part, the flatbed market is humming along without incident. Demand constraints continue within the broader market, although there is some variability at the local level. Supply in the marketplace is willing to move to regions and/or shippers where they can offer project or consistent lanes to drivers. These supply and demand trends have led to relatively stable rates this year but still slightly lower overall than last year.

Workforce losses

Overall capacity in the marketplace continues to outpace demand and, as a result, total jobs within the trucking sector continue to shrink. Transportation jobs fell by 700 on a seasonally adjusted basis in September, a result of poor market rate conditions and increased contract rate competition. Nearly 12,800 trucking jobs have disappeared since April 2023, including 4,400 in the past four months. This downward trend will likely continue as private fleet investment decelerates, and carriers struggle to operate within the current rate environment.

However, recent spot volatility plus the upcoming retail peak season could mitigate further job losses until early next year. One of the more notable impacts on the capacity environment could occur on Nov. 18, when drivers with prohibited status will become ineligible for employment by law. According to ACT Research, approximately 177,000 drivers are currently in prohibited status. Though many are currently unemployed, all drivers with this status have all been eligible for employment until now. Removing this population from the workforce amid holiday peak season volatility could create significant disruption.

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