Full Truckload Market Rates: Hot States IndicatorPosted On 18th July 2017
To get an idea of the FTL or “spot” market, look at the “Hot States” chart below. This shows the ratio of Loads to Trucks. It’s easy to cover loads out of states like Massachusetts, with a ratio of 2.0, while South Carolina with a ratio of 8.0 it is much harder.
However, this isn't the whole story. In Massachusetts, for example, there are more trucks than loads but look more closely at a state like Montana where the ratio is 1.1. This might look easy, but I doubt it is. Montana is a big state with big mountains. Trucks don't like to deadhead so far or climb over high mountains, so carriers are more likely to be picky with what load they will agree to carry there.
Here are the numbers from the spot market that show demand/supply from a load board perspective:
|State||Outgoing Load: |
Less than Truckload (LTL) rates often follow the same pattern since they reflect the underlying realities of the U.S. economy and the supply and demand for goods. For example, the Northeast and Northwest consume (ships in) more than they produce (ships out). YRC's rates OUT of these regions will be cheaper than their rates INTO them. Similarly, rates OUT of the industrial heartland (Illinois, Indiana, Ohio) will be higher than rates
The Southeast (North Carolina, South Carolina, Virginia, Tennessee) has some big industry so you'll see high freight rates out of these states as factories compete to get trucking - and cheap rates back to them from the Northeast and Northwest or other "freight deficit" areas.
Vermont is an interesting case. It has a high ratio at 7.0, which seems strange compared to states such as Illinois and South Carolina which produce more than they consume. Not much is manufactured in Vermont, it is a small market in general. There are mountain ranges on each side of the state and Lake Champlain runs north-south, separating upstate New York from Vermont. The Adirondack Mountain range acts as a barrier between the I-87 Interstate upstate New York corridor and Vermont. These physical barriers increase truckers' expenses, fuel, and travel time to get into Vermont from where they might be emptying out in Albany in New York, Concord in New Hampshire or Boston in Massachusetts. With a shortage of truckers, the ones that do operate there perhaps are able to demand a higher price. Also. the small size of the state means the local truckers tend to tie down the local manufacturers – it is in their mutual interest – and
If you are a shipper in a “hot state” (defined as a higher ratio state), there are some things you can do to incent spot truckers to do business with you. For example, you can live load truckers in one or two hours maximum, and provide some form of Quick Pay to the trucker upon them providing you with the Proof of Delivery (POD). In low ratio states, such trucker friendly policies will mean more loyal and price flexible FTL carriers will be available to you. If you prefer to use brokers, make sure they have a similar policy of Quick Pay, which may mean you must pay the broker more quickly.
If you have specific questions about your market, contact us today!