Fleet Management News & Business Info | Commercial Carrier Journal
Issue link: http://read.dmtmag.com/i/835233
commercial carrier journal | june 2017 41 What rate volatility? 'Tepid and anemic' freight demand tampers assumed impact of ELDs BY AARON HUFF E very Wednesday, Diane McHaney downloads rate data from DAT Solutions into spreadsheets. As the pricing analyst for Barton Logistics, a nonasset trans- portation company based in Bandera, Texas, she applies statistical tools to identify trends in spot and contract freight markets. Of particular interest is the mode — the most frequently occurring value in the data set. Also important is the stan- dard deviation of DAT's rolling 15- and 30-day spot market rate data. Both of these statistical tools help identify early signs of rate volatility. One year ago, this ongoing analy- sis led McHaney and Criss Wilson, Barton's vice president of operations, to predict that rates would increase dramatically prior to December 2017 as more carriers came into compliance with the electronic logging device mandate. Pricing would be much higher, they surmised, as ELDs took capacity away from small fleets and owner-operators by lowering their utilization. Both now believe their predictions were wrong. "We have learned that quite the op- posite of that is happening," McHaney says. As more carriers implement ELDs, rates actually are less volatile, she says. "(ELDs) are not having any effect right now," Wilson says. "ere is noth- ing that leads us to believe there is any volatility in the market right now." Wilson believes that any rate increas- es will come from the demand side of the equation, but demand so far this year has been "tepid and anemic," he says. e last time Wilson saw positive volatility was last November and December. is was to be expected during the peak retail season, but then rates "tanked" aer the second week of January, he says. Spot market rates have recovered gradually since but remain at a low average of $1.40 to $1.50 per mile. Surprisingly, there has been more volatility with contract rates, where the mode "is all over the place," Wilson says. But the volatility is not wide- spread, and the DAT rolling 30-day average for contract rates has "pretty much flat-lined," he says. e data leads Wilson to believe that any volatility in contract rates is short- lived and limited to certain geographic regions. As for why the ELD mandate has not impacted rates as many believed it would, Wilson points to "an underly- ing structural change going on in the market." What changed? Motor carriers are acting more like freight brokers, he says. Many of the top freight brokers in the market today began as motor carriers. ese asset-based transportation com- panies have grown their brokerage divi- sions rapidly by managing more freight in lanes that their carrier operations no longer can service due to higher costs and lower utilization, some of which can be attributed to the use of ELDs, Wilson says. Asset-based transportation compa- nies hold a marketing advantage with shippers since they directly control their equipment and drivers, but brokerage and third-party logistics providers have leveled the playing field with technology. Nonasset companies can provide shippers with the same supply chain visibility — if not better, Wilson says. Barton would like all of its carriers to use freight-tracking apps from Trucker Tools and MacroPoint. "Carriers that resist using these free tools are not like- SPECIAL REPORT: ELECTRONIC LOGGING DEVICES Bandera, Texas-based Barton Logistics, a user of Trucker Tools' integrated Load Track platform, is able to streamline its freight matching and tracking process.