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Transportation costs keep rising as service deteriorates

Posted - March 29, 2021

Carrier compliance levels drop below 75% while rates increase 6% in February


Truckload carriers have continued to struggle to provide consistent coverage through the first quarter of 2021, and in return costs have increased. This relationship seems counterintuitive at a base level — why would you spend more to get less? — but it is a common result of demand exceeding supply in just about any industry.

National van truckload tender rejection rates — the percent of electronic requests for capacity declined by carriers — have exceeded 20% since early August outside of a single day in February. The truckload market appeared to be on a path toward stability with rejection rates sliding slowly through the first month of the year before winter storms disrupted trucking networks and shipper production cycles. The result has been rejection rates consistently above 25% since Feb. 18.

With decreasing carrier compliance come increasing transportation rates. The average van truckload spot rate increased 20% from the beginning to the end of February, according to Spot rates are much more volatile and represent roughly 10%-20% of the for-hire truckload market freight volume. Most of the freight moves under a more consistent pricing structure or “contract” rates.

The overall average cost of a dry van truckload move increased 6% over the same period, according to FreightWaves’ Van Contract Index, which measures the average median base rate per mile of truckload invoices on a daily basis. This index largely consists of long-term contracted freight rates and excludes loads under 250 miles.

It should be noted that retail fuel costs also increased roughly 12% last month, according to the Department of Energy, which influences the spot rates, but fuel surcharges have been removed from the contract rates.


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