Flatbeds take the spotlight as spot market heats up

If you have been watching the spot market metrics for flatbed equipment you know that this sector is outperforming freight for van equipment. We addressed this issue here several weeks ago, but flatbed’s strength has not only continued but has accelerated a bit. In our earlier analysis, we speculated that the impending tariffs on steel and aluminum could be a factor. However, if that were the lone issue, we presume that flatbed activity would have at least tapered off by now given that those tariffs took effect March 12.

For reasons discussed below, we still think that tariffs are the key factor, but we now believe that perhaps it’s not just metals but also heavy capital goods – items like factory machinery and agricultural equipment, for example – that is fueling flatbed, perhaps in conjunction with improved freight related to residential construction and industrial production and the ongoing tightness of capacity in this sector.

Let’s first unpack what happened during week 12 (ending March 28) and then analysis the potential factors behind why the flatbed segment is stealing the show.

Flatbed rates keep climbing – and fast

For the seventh week in a row, flatbed spot rates in the Truckstop system rose, marking the highest levels since June 2023. The overall spot market is riding flatbed’s coattails. The total broker-posted spot rate in the Truckstop system increased 5.4 cents – the second biggest jump of the year - and flatbed was the biggest contributor.

• Flatbed rates rose 5.6 cents — the second strongest weekly gain since October.
• Year over year, rates were up nearly 5% – the best comparison since July 2022.
• Still, they sit just under 3% below the five-year average. Anyone who follows the trucking industry understands, though, that this says more about extraordinary rates in 2021 and 2022 than it does about rates today.
• Stripping out the fuel component, flatbed spot rates were up about 10% y/y, creating a highly favorable situation for flatbed carriers, at least relative to a year ago.

Load volumes are up — Flatbed again leads the way

Across the board, load volumes in the Truckstop system surged 8.7%, making it the strongest weekly volume since July 2022. Once again, flatbed was the muscle behind the numbers:

• Flatbed load volume jumped 9.7% week over week, now more than 33% above the same week in 2024.
• Flatbed spot loads are hovering just over 1% below the five-year average, outperforming dry van and refrigerated by a wide margin. Spot volume for those are running 35% to 40% below the five-year average.

Why is flatbed so hot right now?

This is the $64,000 question, so to speak. Because we do not know details of individual load postings, there’s no clear answer. We have some thoughts, though, on why tariff-induced pull-forwards of equipment, metals, and other heavy goods are likely at least a big factor even if housing starts and manufacturing production are at play as well.

Our analysis centers on two principal issues:

• The geography of flatbed’s strength
• Indicators of activity from other sources

The analysis below assumes that the spot market strength is driven principally by freight volumes. However, as addressed later, there’s another potential issue.

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Geography

Drilling down to a regional level, growth in flatbed load postings is especially significant in the East – specifically the Southeast and Northeast. The Southeast, which is the largest region for flatbed spot loads, in the latest week recorded its highest spot load volume in the Truckstop system since June 2022. The Northeast, which is a considerably lower-volume region, posted its strongest load activity since April 2022.

The middle of the country – Midwest and South Central – has seen solid gains as well, but not nearly to the degree that loads have risen in the East. In the West, volume quite recently has risen modestly on the West Coast, but the Mountain Central has seen seasonal strength at best seasonal strength.

If we assume that three most likely explanations for flatbed strength are residential construction, manufacturing output, and tariff activity, this pattern reinforces our theory. Although the Northeast might see some volatility in housing starts due to weather, etc., we would not expect a big run-up in flatbed activity to come from housing starts in the Northeast, which is hardly a hotbed of housing activity.

What might drive Northeast flatbed activity would be ocean port shipments of equipment and metals imports to ports like New York/New Jersey and Baltimore just as Southeast activity could be linked to shipments into Savannah and Charleston, among others.

Those ports are all relatively close to U.S. population and manufacturing production centers, making trucking more attractive than rail in many cases. Conversely, shipments coming into West Coast are much more inclined to move inland by rail. West Coast flatbed loads have been rising, but the gains have been much more recent and to a much lesser degree than in the East.

Other indicators

Unlike spot metrics, most of the data we have at hand are not high frequency. We do have figures on housing starts and on manufacturing output for February, and they certainly offer some plausible – if not totally compelling – support for strength in flatbed due to those economic sectors.

Housing starts rebounded in February almost to the degree that they fell in January. However, the seasonally adjusted annual rate was below the December level and not dramatically higher than it had been for most of last year.

Manufacturing output saw strong m/m growth in February, and automotive production growth was especially strong at +8.5% m/m. However, that increase followed significant m/m decreases in three of the four most recent months, and the overall seasonally adjusted level of output was not especially strong.

One source of relevant data that is as up to date as spot loads and rates is rail carload figures from the Association of American Railroads. This data is not nearly as precise as those monthly indicators in assessing housing or manufacturing, but at least they are more frequent.

The rail data offers some modest support for stronger home construction, but the picture is decidedly mixed for manufacturing. Carloads of lumber and wood products are up over the past three weeks, although they are barely above comparable 2024 levels in the past couple of weeks. Still, it’s possible that rail carloads of lumber would rise only recently if home construction had only recently drawn down inventories.

Carloads of metals and metal products have been rising more consistently but they are still well below comparable 2024 levels. On the other hand, carloads of motor vehicles and equipment have been up y/y recently and surged especially in the latest week. However, that doesn’t necessarily mean production is up that strongly. This could reflect the same dynamic for rail that we suspect might be driving flatbed activity – strong imports of vehicles and equipment that are about to be subject to 25% tariffs.

The bigger picture: Reflection of capacity tightness?

As noted, it’s possible that flatbed is seeing solid volume from multiple sectors and that the real issue is not volume but capacity, which tends to be especially important for spot metrics.

For starters, payroll employment in long-distance specialized trucking has seen significant recovery, but it is still 2% below the pre-pandemic level.

Lower employment does not mean the market is tight, but wages are a good proxy. Average weekly earnings in long-distance specialized trucking were at their highest level on record in January and were up about 8% y/y. You would expect employee earnings to rise based on higher utilization, and higher utilization means tightening, of course.

Quick hit: Bleeding halted at least briefly for van

Before we wrap up, we should at least note that metrics for dry van and refrigerated van equipment at least improved in the latest week. In both cases, spot rate increases in the latest week were the first in five weeks and only the third this year.

• Dry Van: Spot rates rose 3.5 cents – the biggest jump of the year so far – but are still down 0.7% y/y.
• Reefer: Rates gained 2 cents but are still down 4.3% y/y.

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