A few months ago, we talked about three factors that may cause flatbed rates to increase throughout 2021, let’s look at how rates have progressed since then and why.
Since February, national flatbed rejection rates have increased 44% while van and refer rates are still incredibly elevated at 21% and 38%. Their swings seem relatively insignificant when compared to the massive surge in flatbed rejections over the past 8 months.
Previously, typically when rejections increase so do spot rates, and eventually contracted rates follow suit. As you can see here, a tremendous seasonal push in flatbed demand as the weather broke in March sparked a huge spike in rejections until they peaked north of 30% in June.
At the same time, rejections were peaking, June was the last month we saw spot rates rise above contracted rates in a five-month margin narrowing battle.
The magnitude of stickiness surrounding the offset in supply and demand becomes even more apparent when you look at both rejections and spot vs contracted rates at the same time. Also, the increase in compliance after June’s peak can be seen in the approval of higher contracted rates being submitted by carriers.
That is what has transpired since we made our predictions in February but let’s talk about why.
Starting with Total Residential Construction Spending, the most recent release, according to the US Census Bureau, came in at 795 million for August. That’s up 14% from the pre-pandemic high set back in 2006 before the housing bubble burst and 7% or 57 million from the last time we visited this data back in February.
As for Single-Family Housing Starts and Building Permits, both have experienced drop-offs since February however, not due to demand as both data sets are reporting numbers above pre-pandemic levels and have both labor and building material shortages to combat.
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