Increasing spot market rates should translate nicely to rate increases on the contract market, says DAT Solutions’ s Mark Montague.
Interviewed recently by CCJ magazine, Montague explained that despite spot market rates flattening somewhat in recent months, the base rate – the linehaul portion of the final rate price – still saw growth in 2014 even though gross rates were somewhat stagnant. He also talked about diesel price’s impact on rates, where he sees pricing headed in 2015 and how cheaper diesel could change freight flow.
He said the forecast for 2015 pricing on the contract side is on pace for about a 4 to 6 percent increase in the base rate, the linehaul portion, as opposed to fuel surcharges or accessorials. This trend will support things like new equipment acquisition and hikes in driver pay, “which is what fleets need to do to maintain their size or grow modestly in 2015.”
The rate increases in the spot market last year were a function of not having enough capacity.
“The spot market is going to be more stable. The rate increases really were a function of not having enough capacity. At least in the first half of this year, there’s this little window of opportunity for spot market rates to stay high. In other words, the spot market and the contract market have a relationship, and the spot market adjusted pretty quickly in the last quarter. The contract rates have some catching up to do.”