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Southeastern flatbed demand softens amid housing lull

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Freight brokers say market returning to normal patterns, but large flatbed shippers less affected by seasonality

The falling price of West Texas Intermediate crude is discouraging capex by exploration and production companies, and for some months now, housing starts and residential construction activity has been one of the weaker segments in the economy. Demand for flatbed trucking capacity—closely associated with construction and industrial production—has softened in the Southeast. In our view, loosening flatbed markets indicate a return to normal seasonal patterns (the tight winter of 2017-8 was an outlier).

The few flatbed lanes trending upward are in the oil patch. According to DAT’s RateView tool, flatbed trucks driving from Houston to Midland on the spot market have averaged $2.24/mile excluding fuel surcharges over the past seven days, which is up from November’s average of $2.15. Spot rates from New Orleans to Midland and Shreveport to Midland, the lanes connecting the Haynesville shale play to the Permian Basin, are also up over November averages.

Still, we see downward pressure on rates as flatbed spot prices continue to drag contract rates down. For intraregional moves in DAT’s Southeast region, flatbed spot rates are 48 cts below thirty day averages for contract rates ($2.83/mile); in the South Central, which includes Oklahoma, Texas, and Arkansas, contract rates for intraregional moves are at $2.48/mile net of fuel, 34 cts above spot.  

“Currently rates are down and demand is down as well,” Nathan Frazier, Director of National Accounts at LYNC Logistics, told us by phone. “The market in general is down on flatbed.” Frazier said that flatbed rates have dropped 12-15% in the past month, which he attributed to a return to normal seasonality. 

“Going into this time last year, customers were freaking out because of the ELD mandate. So they moved a lot of freight in a really short time to get it off their docks, so it wasn’t their responsibility,” Frazier recalled. “We’re going back to standard year-over-year numbers and procedures.”

Frazier said that flatbed freight is generally moved by smaller customers who slow down production in winter months. A freight brokerage executive in Chicago agreed.

“I did recently hear from a company big in building products that they have had very low volumes the latter half of the year, and that’s consistent with their competitors,” said Andrew Silver, CEO at MoLo Solutions.

One Chattanooga-based broker who has concentrated on flatbed carriers for a decade said that the picture is more complicated than an across-the-board seasonal softening, and that demand is patchy. Asa Shirley, VP of Sales at Arrive Logistics, told us that flatbed rates inflated with the other equipment types over the past year and a half and are not really coming back down. 

“I feel like a lot of the flatbed carriers are trying to stay close to $2.30 or $2.50 a mile,” Shirley said. “A lot of customers are still moving flatbed freight—it’s not just a faucet that turns off.”

Even though housing starts have slowed, commodities that are more fundamental to the industrial economy are still moving at high volumes.

“The larger customers are still moving and grooving,” Shirley said. One of Arrive’s flatbed customers that ships steel is still moving more than 400 loads per day. “Sometimes for medium-sized accounts, it’s good business to do no business at all. They’re shutting down to cut overhead and waiting until the ground is softer. But the larger flatbed customers don’t do that, because they still have to drive their commodities into the economy. Larger flatbed accounts are still rolling; you damn near don’t even see any seasonality with them.”

Shirley listed some of the flatbed markets in the Southeast where he sees opportunities for brokers, saying that outbound Tampa was unusually tight and paying higher, and outbound from the Panhandle “is a really tight market and really difficult,” while the rest of Florida stayed soft. 

“Anything going into Alabama or Mississippi [is an opportunity]—those are good markets if you’re a truck driver,” Shirley concluded.

John Paul Hampstead

John Paul conducts research on multimodal freight markets and holds a Ph.D. in English literature from the University of Michigan. Prior to building a research team at FreightWaves, JP spent two years on the editorial side covering trucking markets, freight brokerage, and M&A.