Hottest Trucking Freight Markets + Diesel Price Update | Ep 17

Caroline: [00:00:00] Welcome to This Week in Trucking, the podcast that tells you what you need to know about the trucking market for the week. Today we’re talking about diesel prices, where you should be looking for loads, trends in cargo theft, and also a story about TQL. Hey, Gurvir. How’s it going?

Gurvir: It’s hot everywhere these days. 

Caroline: Is your dad out on the road this week?

Gurvir: Nah, he’s been home. His truck’s in the shop. They can’t figure out what’s going on. It’s some sort of light. And he eventually had to take it to a Kenworth dealership. So he’s been just chilling at home and not working, but that’s good too. He’s Just yeah, just chilling at home.

Caroline: Nice. A well deserved break. Ok, guess what the on highway diesel fuel price is today. What do you think?

Gurvir: 3.82 

Caroline: You’re so close.

Gurvir: really 3.83,

Caroline: This isn’t fair, I pulled, this number is from Monday, so it might be 3.82 today. It’s 3.826, which if you round up, it’s 3.83 so that’s that was the on highway diesel [00:01:00] fuel price across the board in the country on Monday. That is down four cents from a week ago, so that was big news, because diesel prices had been creeping upward the last four weeks, and now it’s down by four cents. We’re still up actually compared to last year…But yeah, pretty much biggest drop in fuel prices was in the Midwest followed by Gulf coast and the Rocky mountain States.

Interestingly, diesel prices are 18 cents or almost 18 cents cheaper than what they were in the Rocky mountain States last year. So if you’re in Colorado or somewhere around Rocky Mountain States, you’re feeling pretty good about diesel prices compared to what we were feeling like in July of last year.

Gurvir: Yeah, diesel prices have been fluctuating. I think we saw like a huge decrease and now they started to go up And now I think this week we saw like a small decrease as well. I think what was it like a few cents And I believe they’re going to continue to fluctuate [00:02:00] around here, 0. 04 up, 0. 05 down, and I don’t think they’re going to continue to go down much further.

A couple of reasons was, was that because of the OPEC. Is cutting some production and they have some production cuts that has led to some increase, but overall if you look at the the energy administration, they’re projecting that the barrel will be at 89 for the second half, right?

So right now, it’s at 84, roughly in the second half, just a small increase. A couple of other things, there hasn’t been like a huge. Growth in terms of diesel consumption in the U. S. I think we’re averaging like 1. 3 percent a year growth in 2024, but the supply has increased just because the U.S. is drilling more. So all these things lead to prices being somewhat stable and somewhat down from earlier this year. So these are all really good things. Obviously, election year this year and see, let’s see where gas prices are. Go. Gas price is one of those things that every election year people becomes a topic, right? Hey, how expensive is gas, right? 

Caroline: So where are we with the freight market today? What can you tell [00:03:00] us on a national scale, Gurvir?

Gurvir: Yeah. So let’s look at some data first. So in July, we’re averaging for drive in 2. 09. In June, it was 2. 06. So obviously there’s an increase in drive in rates. If you look at flatbed, flatbed was 2. 51 in June. In July, we’re at 252, so just a small increase. I would just call it flatlining, honestly.

And then refer rates went up by 3 cents, so in June, we were at 244 per mile. In July, we’re at 247. Obviously, pre July 4th, around that time, we usually see a surge in rates. Even though the market is was seasonally adjusting and we saw like the spike in rates and stuff and the market has come down post holiday I don’t think it’s come down that much overall sport.

We’re still above 2019 numbers and last year so but we just haven’t seen a big drop right? So in other words rates are up in july but they’re not up too much and they’re staying [00:04:00] steady. The national averages remain above June averages, technically, right? Rejection rate has come down a little bit.

So we finally crossed 6 percent towards the end of June and beginning of July. We’ve come down, I think, under 6 percent since then, just because of seasonal adjustments. But we finally hit over 6 percent this year which is really good. And then end of July. Usually the freight market is going to cool down a little bit.

And also the most important thing, the spread between contract and spot freight is reducing, right? So that’s a really good thing. So we want to see rejection rate go up, which means the market is tightening and we want to see that spread come down, which means the next phase of a carrier market Is it’s going to begin at some point.

So I think we’re just getting closer and closer again. Freight market predictions are very tough. Nobody can tell exactly what month and what week we’re going to see an inflection. But I think all these are positive signs. We’re not there yet, but I think we’re seeing some positive signs that we’re getting closer and closer.

So let’s see how this year pans out. I think we’ll be much closer towards the end of the year. Hopefully the market turns around like [00:05:00] by. By November, December, right? So let’s see. I think most of the changes that we’re seeing in the market, like the rate, like improvements and rates coming up.

It’s just because of capacity being exited. It’s not because the manufacturing activities increasing or loads are significantly increasing in the market. So I just want to be very clear about that. It’s mostly because of all the capacity that has left. And that’s another mechanism how we can get to supply and demand.

If you look at the manufacturing index it’s not still very in a very good spot. We’re still contracting. I think the rating in manufacturing rating in in June was like 48. 5, I believe, which means we’re still contracting. We want to see that number go to 50 or above. Just as a, as an example, during the COVID boom, that number was closer to 60.

So once you start to see that number, go to 50 51, 52, 53. That means there’s actually, the loads are increasing in the market, which means, look, with the [00:06:00] type capacity already, you’re going to see the markets turn. Obviously, the hurricane season is really active. Let’s see what happens there. I think the last hurricane that hit Houston was not did not have much of an impact.

But these are all the variables that could really just turn the freight market around in the next six months. Let’s see what happens.

Caroline: Yeah. And I think if you’re listening to this and you’re sitting in California versus sitting in Oregon versus sitting in Florida, you’re going to be thinking, wow, really rates are that because I’m seeing X, right? So we wanted to start looking at some of the different variations in region and state in the different markets and see what’s most profitable, what’s least profitable, where do you want to avoid where.

Would you want to loads today? So we’re going to take a look at the spotter index. I’m going to share my screen and show what that looks like, but can you tell us a little bit about Spotter and what, what we’re seeing here, what it actually measures?[00:07:00] 

Gurvir: Yeah. Huge shout out to Spotter. So what spotter is doing and we’re getting some of our data from spotter is that, and by the way, look at them if you’re interested in leasing on to a trucking company. But essentially what spotter does is that it breaks down all the freight markets in the U S and it looks at the load board data and see, Hey, where are the rates increasing?

So the rates that are being posted on load boards, are those going up or down? And as those go up in certain areas, a spotter essentially ranks the freight markets in different areas. So if you’re looking at a drive in market today, You’re seeing that Tucson, San Diego, California, Ontario, Los Angeles, Fresno, California, all the West Coast states are really hot for drive in, this week and today.

And by the way, this changes on a daily basis and a weekly basis. And Saginaw Michigan is pretty up there in the top 10 state markets. And then Missouri is pretty, pretty good, and Evansville, Indiana. So I would say, if you’re on the West Coast, I think any outbound load out of there is really good.

And then the Midwest is really hot as well. But yeah, that’s what the Spotter Index tells us.[00:08:00] 

Caroline: Yeah. Let’s take a look at some of these numbers for reefer as well.

Yeah, I think reefer markets might be a little bit different, but very similar. So yeah, let’s look at the reefer index of view. Yeah, pretty red hot Flagstaff, Arizona all of California again. Las Vegas, Twin Falls, Idaho, so a lot hotter here in, in the Midwest too, but more west of the Midwest, let’s say. So Kansas and Nebraska, Kansas. Duluth, Minnesota is hot. Yeah. Fargo, North Dakota. 

I would say use this data to make decisions, informed decisions. Go to those areas that are hot. The best way to make money is you stay within those orange, red, and yellow areas, right? That’s how you make the best mile per gallon per mile rate per mile.

Caroline: But if you got a flatbed, it’s a different story.

Caroline: Midwest and South. Louisiana, East Texas, Michigan is also a hot market, but Indiana Missouri, Tennessee.

Gurvir: Yeah, and avoid all the blue areas, right? So blue means cold and red means hot so you want to be able to stay in the hot areas as much as possible I would say if you’re very flexible and you can go anywhere definitely use the same method map to make those decisions like, Hey, look, today I’m going to go to Tennessee or Missouri or Arkansas, for reefers.

And I would say, these are really like making informed decisions really critical. And it can make a difference of a thousand to 4, 000 each month, right? Or are you getting the best rate? Don’t stick to those same routes that are, that you’re used to just because unless you have a dedicated freight, right?

If you’re flexible and I would say, change it up a little bit, go to hot markets. It makes a huge difference.

Caroline: Yeah, definitely, I always feel bad for the guys up in Maine. 

Gurvir: Always cold. That’s why you get a really good rate going into the cold areas. And that’s [00:10:00] another thing that this map will tell you. If you go to Florida right now, you’re probably gonna get a good rate going into Florida, going into Maine, and all those areas, but there’s nothing coming out.

Yeah, this basically, this index is based off of origin of freight not inbound. So this, the states tell you where’s the hottest freight coming out of it. Yeah.

Caroline: So that’s a good point. This is, the, a map of the areas where you should stay in, right? It’s best to stay in this area. If you’re a flatbed, that means Midwest and South. If you’re a dry van or reefer, that means Midwest or West Coast right now. But yeah, you don’t want to get stuck in a really cold market because even if you get a good rate going there, you might not get anything coming out.

Gurvir: No totally. So yeah, this is the hot market. Say we’ll be sharing this on a weekly basis so that our carriers and our customers and all the listeners, you get like this informed map of, where you should be going. And hopefully this is very helpful for you guys and you guys can make decisions off of this.

Caroline: We’re also going to be publishing this every week on [00:11:00] Monday on our blog, so go there, subscribe to our blog, and we’re going to be publishing that out every week. Something else I want to talk about is cargo theft. So there was a article that came out that gave me a little bit of hope, that cargo theft activity is down from Q1 so in Q2 we had less than we had in Q1.

Unfortunately, it’s still up from Q2 last year. Cargo theft is still up. Cargo net recorded 771 theft incidents in Q2. That’s a 33 percent increase from the same time period last year, but a 10 percent decrease from Q1 of this year. Organized cargo theft groups in Southern California have been more selective, they say. Targeting high value freight like motor oil and electronics is less frequent now, and there’s more targeting of things like vitamins, supplements, alcoholic beverages, and over the counter skincare products in Q2 compared to Q1. This, there’s a decrease in theft of vehicle accessories, footwear, and consumer electronics, [00:12:00] and still you’re seeing the highest theft activity in California, Texas, and Illinois, although There’s a lot of trucking in those states, so I just wonder, this sort of weighted by the amount of, trucking that, of the trucking industry that exists in those states? They’re pretty, huge states, California, Texas. And but there were a significant reduction in theft activity in some of the top counties. So Los Angeles, San Bernardino, Riverside, Cook, Illinois, Dallas, Texas. So those are good signs hoping that this is creating a safer environment for truck drivers because it can pose not only really terrible risks for people, losing their product, but also people getting into dangerous situations where they’re having their truck compromised.

Gurvir: Yeah, and I would say the, drivers definitely be careful where you’re parking your trucks. Holiday season is always, it’s a cargo theft heaven for a lot of these people. Everybody’s off, everybody’s at their home and the trucks are loaded and they’re sitting at random parking lots [00:13:00] or so just want to make sure that all the drivers, owner operators make sure, don’t get a claim and make sure that your parking spots are secured and and make sure that you’re taking every step to secure your freight, right?

You just don’t want to be a victim of any of these things because, sure, there’s a small decrease, but, these things can go up at any time. Yeah, take control of your own freight and make sure that, you’re taking all the precautions possible. 100%.

Caroline: Take care. And just know that theft and fraud is rampant in this industry. So if you are a carrier, unfortunately, you really have to prove yourself for a broker or a customer to take your business seriously. And there are different ways that you can do that. We talked to Dale Prax this week recorded an episode with him.

So that’ll be out pretty soon. He gave a lot of good insights about theft and fraud in the industry. But this really marginalizes those new carriers coming out because now brokers are saying, Oh, we’re they’ve only been in business for three months, so [00:14:00] I’m not going to work with them.

But that could be someone who has 30 years of driving experience. Who knows they could be, or 20 years, they could have decades under their belt as a really reliable driver or owner operator that’s just never worked under their own MC. So that’s really, he was saying, that’s really unfair to just group together all new carriers and say that they’re no good, that you’re not going to work with them.

Instead, you should be doing a thorough vetting process and setting up your business to be vetted. So that’s just some thoughts of what made me think about my conversation with Dale.

Gurvir: Yeah, I think those things are definitely important. As the freight market tightens, you’re going to see a lot of those brokers work with new MCs, and they’ll figure that out. Hey, how can we vet a good carrier from a bad one? But right now, capacities lose, brokers are still able to find trucks fairly easily, right? So they can easily segment out the new MCs, right? But you see those tables turn very quickly when the freight market becomes tight. All those brokers out there that would say hey, we require a three month [00:15:00] MC or six months. Those also tend to loosen up. So so hopefully as the freight market tightens up and we’ve been in over two years of this recessionary period, hopefully that helps a little bit, too.

Saying that you should always be making sure that you’re getting those inspections, make your company look legitimate, right? Use the macro point. Do all those things. At the end of the day, it’s all about relationships and doing a good job in this business.

Caroline: Yeah, definitely. You had some news about TQL. What did you want to share with us?

Gurvir: Yeah. So similar to claims generally, we would see this, that brokers would get sued when there was a accident with one of their carriers that they had hired to deliver a shipment. And there was a a lot of conversation that would go around in the industry. Are brokers really liable if one of their.

Contracted carriers get into an accident. So this is a good news for brokers where specifically TQL where the 11th Circuit Court of Appeals, a rule that TQL, which is a 3PL, we all know who TQL is, right? Is not liable for a fatal accident involving a carrier [00:16:00] that, that they hired, right?

So what happened was there was a accident in 2020 in Georgia and where a driver, a truck driver. For hard to stop made a negligent U turn essentially and which caused a fatal collision and the widow of the victim ended up suing the carrier’s, the carrier itself and the broker TQL, right?

So the court determined that, hey, TQL is not responsible for that. So this is a good thing for brokers. I think there was, this was always up for question whether brokers are responsible. And I think some instances, some brokers may even be may have been held responsible for something like this.

I personally think brokers are not this is something that should go on a carrier because broker just hired the trucking Carrier to deliver the load and they have absolutely no control over the safety, right? A carrier decides to run has full control over how they run their business, right?

So I don’t think the liability should fall over the broker but this is a good thing for a lot of the brokers in the industry

Caroline: Yeah, I don’t know. I think I’m gonna have to disagree with you on that one because I think that there are some situations [00:17:00] where broker might be at fault or negligent and causing an unsafe situation. 

Gurvir: 100 percent like yeah, that’s a good point

Caroline: Think about pressuring someone who’s, who’s been detained, at a dock for five hours, six hours, and then they’re rushing to get to their next load because they’ve got, a family to feed, bills to pay and something really tragic happens, right? Who is benefiting from that driver being unsafe or taking that risk? So it seems the broker is getting all the benefit [of] some of that unsafe activity of getting in on time and taking risks to do that. And not having to take any of the responsibility for when things go wrong. So I don’t know. I think that there’s a gray area. There’s probably some situations where they’re, they really shouldn’t be liable. And there’s other situations where maybe they have some responsibility to pay.

Gurvir: Yeah, I think that’s a good point. I think in some cases of brokers are pressuring carriers and they’re going to get fined because brokers [00:18:00] tend to fine for every little thing, not using a macro point and not being on time. And in those cases, definitely the broker is liable. That’s why you should have written communication emails, right?

Hey I won’t be able to deliver this because of X, Y, Z. And it is definitely situation to situation, but in those cases, I think the broker is liable if they’re pushing and they’re telling the carrier that they’re going to fine them or this or that. But in those carrier, in those situations, I think carriers should definitely be careful and get all those things in writing from the broker.

Caroline: Yeah, definitely. Evidence is key there.

Caroline: We have a comment from a listener, Trapper Aaron who was watching our videos about electric trucks, hybrid trucks, and said, Edison Motors out of Canada is making huge improvements in hybrid trucking. They’re up in Alberta and making logging trucks. Using its harshest conditions commonly found in trucking. is a really interesting comment to me because we had said that a lot of the electric truck testing is happening in places like Texas and California, where conditions are [00:19:00] usually pretty good for trucking. You don’t have icy roads. And so I looked into this company, really cool company, Edison Motors.

Caroline: Founded by two guys after graduating from college, they started their trucking business. Reminded me a little bit of you Gervere but they started their trucking business with a 1969 Kenworth five axle logging truck. They were hauling a logs in British Columbia, mining equipment in the Yukon. So really heavy duty. heavy industry stuff. And they were adding more trucks, but they were frustrated by the serviceability of the newer trucks. So they decided to start rebuilding old trucks and using those. They expanded their business to designing, hauling, and installing off grid solar hybrid power systems. And then they converted that knowledge into designing a diesel electric truck tailored to logging and heavy hauling. So really cool company. Check them out at Edison Motors. We’ll leave the link in the description. And thank you Aaron for for commenting and letting us know about that company.

Gurvir: that’s really cool. I just visited [00:20:00] their website as you were talking and by the way, the trucks look really cool and I can see how…they look very different and unique. Yeah, that’s a really good idea that they’re taking like the older trucks and converting them rather than building something from, scratch.

And this is an interesting thing. I think we’re definitely going to see a lot of innovation, a lot of different ideas, like hey, usage of existing bodies and working with the existing manufacturer and putting some sort of additional equipment on top or taking existing trucks and converting them.

I think we’re going to see some interesting innovations in this space or building something from scratch. But this is a really interesting space. Let’s see what, how this changes trucking in the next few years. But a cool company for sure

Caroline: Yeah, definitely. And hopefully we will get heard by one of those founders of Edison Motors. We’d love to have you on the podcast. So write to us at hello at Bobtail. com. And if you have any questions or comments about the industry it’s funny, I just got a comment on one of the videos of has she ever even driven a truck before?

She doesn’t know what she’s talking about. And my response to [00:21:00] that is, Hey, that’s why I’m asking. If you have any comments or you think that you want to share your thoughts, write to us at hello@bobtail.com. I monitor that email address on a daily basis and would love to hear from our listeners whether or not you think I should be in front of the microphone,

Gurvir: awesome. Thank you so much everyone and hopefully you guys like this week’s episode and drive safe Be safe out there and stay cool.