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market. The firm’s load-to-truck ratio, which measures the
ratio of loads to available trucks, doubled from the levels
of two years before, a reflection of far more demand than
supply.
Market participants accustomed to short-term surges
normally due to a natural disaster were stunned by the
cycle’s longevity. “It was remarkable, almost like a once-in-a-lifetime experience,” said Kerry R. Byrne, executive vice
president of Total Quality Logistics (TQL), a Cincinnati-based broker.
Spot rates have remained high into the summer as the
trucking supply chain moved through its seasonally strong
period, an improving economy stimulated freight demand,
and some third-quarter orders were pulled forward into the
second quarter ahead of a possible work stoppage at West
Coast ports. Dry van rates averaged $2.08 a mile (including
fuel surcharges) during June, according to DAT data. Rates
for flatbed and refrigerated transport soared as the market
struggled with seasonally high demand for construction
equipment and produce.
In a mid-July interview, Rutkowski stood by her pro-
nouncements at the NASSTRAC conference. “During [the
first quarter], shippers experienced brokers—and to a lesser
extent, carriers—refusing to honor contracted pricing and
forcing shippers to pay much higher spot rates to move
their freight,” Rutkowski said. The behavior “caused a lot
of bad blood between shippers, brokers, and carriers,”
she noted. Rutkowski added that the hostility has abated
somewhat since then and that shippers have become more
“carrier friendly” when crafting requests for proposals. She
didn’t elaborate.
For their part, broker executives on the NASSTRAC
panel said they were caught in much the same first-quarter
maelstrom as their customers. “The capacity crunch was
greater than any of us could have planned for,” said Eric
McGee, senior vice president of transportation for J.B.
Hunt Transport Services Inc., the diversified truckload
giant that has a fast-growing brokerage operation. McGee
said Hunt’s truckers were charging rates that were up “
double digits” from a year ago. McGee added that Hunt never
intends to leave its shippers hanging. “In normal circumstances, we are committed to our customers to honor what
we signed up for,” he said.
Rob Kemp, president and founder of DRT Transportation
LLC, a broker with about $65 million in annual sales, said
the situation was so bad in the first quarter that loads would
not get moved even if they could fetch much more than the
contracted rate. Kemp said that DRT honors its contractual commitments to the point that it will lose money on
the load rather than turn it away. “I looked at our book of
business the other day, and about 8 percent of the loads on
our board lost money,” he told the audience.
MORE THAN MOTHER NATURE
No one doubts that weather conditions played a major role
in the first-quarter nightmare. The storms were as widespread and prolonged as they were fierce. Yet every first
quarter spells weather problems for the U.S. freight network. What made this year different? First off, the elements
amplified an already-strained market for carrier supply.
The industry entered 2014 facing a well-documented shortage of drivers as well as the reluctance of carriers to add
equipment in the face of escalating costs and the lack of a
sustained pickup in demand. An increase in the number of
trucking company failures hasn’t helped; an estimated 390
companies and 10,650 trucks left the road in the first quarter, according to Avondale Partners, an investment firm;
in 2013’s second quarter, 205 companies and 4,745 trucks
exited the market, the firm said.
Over the past four quarters through this June, about 3
percent of the nation’s for-hire fleet and between 10 and 15
percent of spot market capacity left the market, according
to an Avondale study. The rise in trucking failures comes
as freight volumes increase, a phenomenon that Donald
Broughton, an Avondale managing partner who oversees
the report, said he’s never seen in examining data from the
past quarter century.
Carriers also began the year coping with reduced
productivity due to the Federal Motor Carrier Safety
Administration’s new regulations governing a driver’s
