Published by dat solutions Spring 2019

Shortcuts and strategies for freight excellence

Best Practices predictions trends market analysis

SPOTFreightPlaybook

2 0 1 8

REEFER

1. Atlanta, GA

2. Fresno, CA

3. San Francisco, CA

4. Los Angeles, CA

5. Ontario, CA

6. Philadelphia, PA

7. Joliet, IL

8. Chicago, IL

9. Elizabeth, NJ

10. Dallas, TX

1. Houston, TX

2. Atlanta, GA

3. Cleveland, OH

4. Fort Worth, TX

5. Dallas, TX

6. Pittsburgh, PA

7. Memphis, TN

8. Los Angeles, CA

9. Harrisburg, PA

10. Philadelphia, PA

2 0 1 8

FLATBED

1. Atlanta, GA

2. Dallas, TX

3. Houston, TX

4. Los Angeles, CA

5. Ontario, CA

6. Chicago, IL

7. Elizabeth, NJ

8. Memphis, TN

9. Cleveland, OH

10. Charlotte, NC

2 0 1 8

DRY VAN

*Busiest lane information based on transactions in DAT RateView, excluding lanes shorter than 250 miles. *Top markets defined by most outbound freight, according to transactions in DAT RateView

Busiest Flatbed Lane:

Houston, TX to Lubbock, TX

Busiest Reefer Lane:

San Francisco, CATo Ontario, CA

Busiest Van Lane:

Atlanta, GA to Lakeland, FL

TOP 10 MARKETS

Matt Sullivan | Editor

The spot market is nothing if not topsy turvy, and the sharp twists and turns we’ve seen in the freight markets over the course of the past 18 months or so are enough to give you whiplash.

Last year we had a rapidly growing economy that was met head-on by the truckload capacity shortage caused by the ELD mandate. Rates set all-time highs in June, but less than a year later, we have a spot market brimming with new carriers.

But if there’s anything we’ve learned in our four decades in the trucking industry, it’s that these ebbs and flows never stop. New carriers lead to extra capacity, which pushes rates lower. Those lower prices push carriers out of business, tightening capacity and adding pressure on rates.

Wash. Rinse. Repeat.

Anticipating those cycles – and reacting to the disruptions of those cycles – is key to any 3PL’s strategy. In this issue of the Spot Freight Playbook, we look at some of the forces driving market trends, the best approaches to securing capacity and introduce the brand-new Trucking Freight Futures exchange.

Trucking transformationsStay ahead of trucking’s fast-paced evolution.

“The most important freight industry development since The load board.”

The trucking industry is 35% bigger than the U.S. petroleum and coal industries combined.

$726BMarket Size

3PLsTo protect their exposure to pricing volatility

ShippersTo mitigate exposure to rate volatility

Financial markets As a tool for clients who wish to hedge or speculate

Who uses Trucking FreightFutures?

Carriers To balance against falling prices

What is the Trucking Freight Futures exchange, and how does it work?

Trucking Freight Futures works just like the futures markets for any other commodities. Companies purchase the futures contracts on Nodal Exchange as a way to reduce the financial risks associated with volatile spot market freight rates. Unstable prices create cash flow issues for trucking companies, so those businesses can hedge against price changes by buying or selling financially settled futures contracts.

Who buys or trades trucking futures contracts?

Market liquidity comes from carriers, freight brokers, third-party logistics providers, shippers, financial firms and commodity traders. Transportation and logistics companies buy or sell a futures contract in anticipation of freight rates moving in an unfavorable direction.

What determines the prices on these contracts?

DAT’s massive spot market index is the industry standard for pricing and is far

and away the best source for assessing which direction rates are moving. The futures contracts financially settle based on daily spot market dry van rates provided by DAT for seven directional lanes that best reflect the market trends for those regions, plus three calculated regional indices and a national average.

How does this change how the trucking industry does business?

It’s the most important trucking industry development since the load board or deregulation. It provides more transparency than the industry has ever had before, and it lets businesses negotiate price with more perspective on future market conditions.

Trucking Freight Futures is a partnership between DAT, FreightWaves and Nodal Exchange.

For more information about Trucking Freight Futures, visit:DAT.com/FreightFutures or FreightWaves.com/Trucking-Freight-Futures

Trucking is undergoing a transformation, as new technologies, e-commerce, ELDs, and economic growth reshape the supply chain landscape and add volatility to the mix. In response, the first Trucking Freight Futures exchange opened in March, offering new opportunities to manage the risks associated with that volatility.

Duty now for the future

Matt Sullivan | Editor

OnTimeFull visibility, no check calls. See every load in real time on one screen.

RateViewThe industry standard in pricing. Spot and contract rates for 65,000 lanes.

not just more drivers. more Freight Market tools.PowerTrucking's largest load board. Find trucks at the right price for every shipment.

Why is DAT the most popular load board for brokers?

Because it's the most popular load board for drivers.

CarrierWatchAvoid unsafe carriers. The best source on authority, safety and insurance status.

BrokerTMSBack-office efficiency. The only TMS built specifically for brokers and 3PLs. DAT.com | 800.547.5417

"ELDs will lead to higher rates"

Spot market prices set record highs in June.

The national average van rate hit $2.31 per

mile. Reefers hit $2.70, and the national

flatbed rate topped out at a whopping $2.82

per mile. For comparison, the average van rate

for June of 2017 was $1.80. Claim: TRUE

"Small carriers won't be able to afford ELDs"

While it might’ve been true that the extra

expense of ELD adoption pushed some carriers

out of business, it wasn’t true for the vast

majority of trucking companies.

A DAT survey found that 91% of small carriers

were compliant with the mandate before April

1, when law enforcement started handing out

fines. Part of the explanation could be that

ELD providers like KeepTruckin offered more

affordable service than first expected and

even offered to buy out contracts for more

expensive ELD services. Claim: FALSE

"There will be fewer trucks available"

This was correct, but maybe not for the

reasons people expected. Spot market

volumes set records in the first half of the year.

Shippers and brokers had trouble securing

capacity, and shipments that would’ve

normally moved under contract fell into the

spot market, so the truck shortages were

because of the demand side rather than the

supply side. Claim: TRUE

"Carriers will quit the industry"

Four months before the ELD mandate, DAT

surveyed 645 TruckersEdge customers, mostly

small carriers and owner-operators. Thirty

percent said that they would leave the industry

rather than use an ELD.

Some carriers did leave, and others went

out of business. But they were the exception

rather than the rule. In fact, the number of

active carriers grew at a faster pace after the

mandate went into place, with high rates

inspiring many company drivers and leased-on

owner-operators to get their own motor carrier

authority. That trend could reverse with lower

rates. Claim: FALSE (For now)

ELDs were in every conversation in the freight business in 2018. We separate fact from fluff in this exclusive retrospective.

Matt Sullivan | Editor

Whose predictions came true, Who missed the mark, and

What to watch for.

The great ELD SCARE

Fear VS fact

12345

AOBRDs

Trucks using Automatic On-Board Recording Devices, or AOBRDs, that were previously exempt are required to switch to ELDs by December 16 of this year. Many large fleets have been using AOBRDs for years and have yet to make the switch.

Hos ReformFMCSA hosted listening sessions in March 2018 to hear directly from drivers about hours of service rules, and in August the agency asked for input on changes to rest breaks and split sleeper berth rules. A proposed rulemaking regarding those changes is expected in the coming months.

Minimum wageSeveral states have new minimum wage requirements this year. TCA legal counsel notes: "Employers with operations in different states must take care to monitor these various state law requirements ... because carriers are often targeted with wage and hour lawsuits brought by drivers and other employees."

California lawsThe state supreme court set criteria that define whether a leased-on owner-operator is an independent contractor or employee, plus FMCSA announced that carriers are exempt from the state's meal and rest break requirements.

Drug TestingThere are two driver drug testing regulations that could further shrink the already-tight pool of eligible drivers. Full compliance with the Drug and Alcohol Clearinghouse is required by January 2020. Also, the current transportation funding bill calls on the FMCSA to issue a rulemaking to permit hair follicle testing as an acceptable alternative to urine testing, after the Department of Health and Human Services issues guidelines.

Last year, the ELD mandate dominated the regulatory news. But there are several other regulations on the horizons that transportation professionals need to keep an eye on.

5 Regulations to watch in 2019

ROAD RULESPat Pitz | Senior Reporter

Source: American Transportation Research Institute

Driver shortage

Hours of service

Driver retention

ELD mandate

Truck parking

Compliance, Safety, Accountability

Driver distraction

Infrastructure, Congestion, Funding

Driver health and wellness

Economy

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Top 10Issues facingThe industry

19

WHERE FREIGHT TALKSBUSINESSInnovative ideas and fresh perspectives from the brightest minds in freight. Connect with the most talented transportation professionals working today. Limited-Time Offer:DAT.com/Conference

Register before April 30th and save $200. Save $235 per person with groups of two or more.

Featuring acclaimed speaker Jack Uldrich, author of Foresight 20/20.