This week’s chart is a “seasonality” chart representing 3 years of the same data set overlaid on the same axes. Each line represents the same trailing twelve-month period for the past three years of the national DAT Van Freight Rate Index, which represents the average U.S. dry van base freight rate per mile with no fuel or assessorial charges. The chart above is showing current year national spot rates starting to align more closely with early 2016 and 2017 levels.
Seasonality charts are useful in seeing changes in year-over-year performance quickly. They are normally used in finance to evaluate financial instruments, such as stocks, or performing financial analysis on data that has seasonal movements, such as revenue. Seasonality charts are very useful when analyzing anything with annual ebbs and flows, however. The freight market is very seasonal as spot rates decline in winter and increase in late spring/early summer. It is useful to look at the annual movements on the same scale to see how each seasonal movement literally stacks up.
The white line represents the most recent trailing twelve months from February 2018 to February 2019. The yellow line represents the previous year, February 2017 to 2018, as indicated in the upper left corner along with the value that corresponds with the ending date. For this chart, the end date is February 15th, with each February 15 value displayed next to the year on the chart legend. Note: the present year’s most recent value is from February 1 due to the fact this index is developed for the settlement of freight futures releasing this spring, so there is a lag in reporting to ensure all rates are final.
The current year is still showing rates above those in 2016 and ’17, but have fallen well below last year’s value. Comparing the February 1 rates, the 2018 value was $1.68 per mile while this year it is $1.36 per mile. The 2016 and ’17 rates were $1.27 and $1.30 respectively.
National spot rates had been well above historical levels starting in September of 2017 and lasting through the summer of 2018 before re-aligning with the previous year’s rates in October of 2018, where it should be noted, the rates were still well above the two and three year ago values. It was not until this late this past December that the most recent year dipped noticeably below the previous year.
Current spot rates are approaching 2016 and ’17 levels more rapidly in the past month as the national freight market normalizes. From September of 2017 to October of 2018 was one of the longest freight market bull runs since the 2009-10 period when the U.S. economy recovered from a recession. The two periods are very different, however, as the economy has been in constant expansion since 2009 and that run was more a return to normal from being on the bottom.
Many economists are calling for a softer 2019, which some current macroeconomic data supports . If we learned anything from the past 18 months, it is that nothing is certain and all it takes is a delayed harvest, a couple of hurricanes, an economic boom, and an exacerbated driver shortage to create an environment for rates to increase 36% on a year-over-year basis.
About Indices presented in this article
(SONAR: DATVF.ATLPHL) DAT Van Freight Rate Index — National — DAT developed the van freight rate indices measuring the average spot rate for dry van freight in seven lanes and four buckets that measure the average spot price in regions. These rates do not include fuel or any assessorial charges due to the fact they will be used to settle freight futures releasing this March. The methodology has to be consistent and clean.
(About Chart of the Week
The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real-time. Each week the Sultan of SONAR will post a chart, along with commentary live on the front-page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.
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