This measurement is useful in helping you decide when is the right time to go short or long in your contract negotiations with customers.
Unlike truck loadings, which are modeled, FTR’s truckload rate estimates are based on actual market data. FTR gathers truckload rate data – typically expressed as revenue per loaded mile – from various sources. In general, contract rate data is obtained from various government, association, and other private-sector sources. Spot market rate data is obtained from the major load board operations.
FTR processes contract rate data for dry van, refrigerated, flatbed, specialized, and tank. We are not aware of any reliable source of bulk/dump rate data. Spot data is available for dry van, refrigerated, flatbed, and specialized. Specialized truckload rates include a variety of equipment types, although it generally excludes tank.
In addition to separate rates for spot and contract, FTR calculates a total, or blended, truckload rate for each equipment type for which both contract and spot rate is available. The blended rate is based on FTR’s assessment of the typical split in the market based on volume: 70% contract and 30% spot.
Because rates can vary so widely by geography, type of commodity, or level of service, among other factors, FTR has chosen to express truckload rates as an index, which is based on average rates in place as of Q1 of 2008 for each equipment type. By focusing on an index rather than the actual national average rate per mile we avoid as much as possible the distraction of market participants not understanding why their rates might vary. Our principal goal is to estimate and forecast the direction and scope of rate movements in a manner that has broad application and value to shippers, carriers, and brokers.
Similarly, our estimates and forecasts are seasonally adjusted, which facilitates an understanding of how the market is performing. Unadjusted rates might rise or fall based on seasonal pressures or lack thereof, but that data does not convey any sense of true market strength or weakness.
Swings in fuel costs also can distort underlying rates. By excluding fuel surcharges, we essentially are communicating rates as defined by fundamental market dynamics. Although most of our charts display rates excluding fuel surcharges, our supplemental database for Shippers Update also reports total rates since shippers are concerned about total shipment costs.
FTR’s active truck utilization metric is the critical variable in FTR’s forecast of contract, spot, and blended truckload rates. Higher utilization generally leads to higher rates and vice versa.