Diesel’s climb past $6 a gallon continues to be the main driver in the spot market, setting the tone for the fourth quarter.
The average cost of diesel per gallon has reached new highs of $6.529, as of Sept. 21, according to the U.S. Energy Information Administration.
DAT Freight & Analytics’ seven-day broker-to-carrier spot rates rose across the board for the week ending Sept. 19: Dry van gained 4 cents to $2.96 a mile, reefer climbed 9 cents to $3.59, and flatbed added 6 cents to $3.55. Load posts totaled 2.9 million for the week, up 16% from the prior week, while equipment posts rose 8% to 175,593 as freight returned to normal in the week after Labor Day.
Truckstop.com and FTR Transportation Intelligence told a different story on van and reefer. Total load activity rebounded 26.7% after the holiday week, and truck postings jumped 13.3% after three weeks of decline. But dry van rates decreased just under 3 cents and refrigerated rates dropped 6.4 cents, their first decline in five weeks. Flatbed was the exception for both firms, though FTR had flatbed rates up more than 5 cents.
Freight brokerage TRAFFIX’s biweekly market trend report pointed out that tender rejections sat at an elevated 14%, indicating that capacity is still limited and carriers are selective when accepting freight. Truckload volumes improved after the holiday but remained roughly 3% below last year, pointing to soft demand.
“The market has been steady since Labor Day,” the report noted. “Spot rates and rejections are no longer rising sharply, but they also have not fallen enough to show that capacity is opening up… The biggest change this week is fuel.”
How high could diesel go?
“In the near term, I don’t think a $7 or even $7.25 per gallon would be especially surprising,” said Alex Fuller, VP of commercial intelligence at TRAFFIX.
Fuller illustrated the impact of a price jump on trucking: “A tractor averaging about seven miles per gallon is currently spending roughly $0.93 per mile on diesel at $6.529. At $7.25, that rises to about $1.04 per mile. Even at $10 diesel, the gross fuel expense would be about $1.43 per mile—roughly $0.50 per mile more than today, or about another $500 of fuel expense on 1,000 truck miles.”
Smaller carriers without strong fuel-surcharge programs or fuel discounts would be affected by higher transportation costs, Fuller said, but the bigger risk is entering peak season with record fuel costs and an even tighter capacity environment.
“For shippers, that means transportation budgets are likely to remain under significant pressure through peak season,” said Fuller.
“Fuel surcharges will rise, and businesses in sectors like food, agriculture, building materials and other commodities — where transportation represents a larger share of delivered cost — will feel that pressure more acutely, and may ultimately have to pass some of it through in their product pricing.”
Capacity remains tight, Dean Croke, industry analyst at DAT Freight & Analytics, pointed out. Truck availability remains 30% below a year ago for van, 24% for reefer, and 24% for flatbed. At 175,593 total equipment posts, Croke noted that was the lowest Week 38 figure in DAT’s records. Load-to-truck ratios reflect the scarcity: 11.2 for van, compared with 5.9 a year ago; 19.1 for reefer, compared with 9.8; and 40.5 for flatbed, compared with 25.9.
