Freight Rates are Absurd

Photo from the LA Times

The following information is taken from a JOC.com article published on September 3, 2020. Find the source material here.

Truck rates from US West Coast ports to points inland are rising, in some cases doubling year over year, as a flood of imports flows inland from Los Angeles and Long Beach, colliding with domestic intermodal constraints and trucking networks still disrupted by the COVID-19 pandemic. A powerful ripple effect originating on the ocean is raising truckload and less-than-truckload (LTL) rates, as shippers pay more to meet e-commerce deadlines.

Average spot truckload rates from Los Angeles to Chicago were up 124 percent year over year at the end of August, and more than 150 percent higher than in April, according to DAT iQ, a division of DAT Solutions. DAT’s seven-day rolling average spot rate from LA to Chicago had skyrocketed from 94 cents per mile in April to $2.40 per mile, excluding fuel surcharges, at the end of August.

The increase was even higher in rates to Chicago from Ontario, California, the heart of the Inland Empire warehousing and distribution hub. That average spot truckload rate rose from 93 cents per mile in April to $2.64 per mile, sans fuel surcharges, Sept. 2. Those figures provide factual basis for anecdotal claims of soaring truckload and LTL rates as shippers struggle to get freight off ships, through West Coast ports, and onto intermodal trains or trucks.

“Carriers are telling us it’s the network imbalance that’s driving this,” Dean Croke, principal analyst at DAT iQ, said in an interview. “I can’t quantify that. But it’s the only logical explanation I’ve got.”

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