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Market Update in Response to COVID19 – 5/14/2020 Ken Adamo, Chief of Analytics at DAT It is our mission at DAT to help customers mitigate uncertainty in their businesses. We have been closely observing trends in the markets in near real-time and aim to provide valuable and actionable information to the market, not sensational and reactionary headlines. To advance that objective, we are releasing this market update with hopes that it provides value and helps those trying to understand this tumultuous market.

Summary Market Thesis There are plenty of reasons for optimism the spot trucking market going forward, with increases across the board in our major metrics pointing to upward trends in volumes and prices across nearly all equipment types, but we are still looking for more concrete evidence of recovery before placing too much stock in the recent trends.

Our forecast models are joining in the optimism as well. This is the first week in almost two months where we have an upward consensus amongst the models for both dry van and reefer. We spoke last week about the fragility of this recovery. It still feels like there are more unknowns than certainties over the next couple of months, which is all the more reason to stay focused on the data.

Supply and Demand Trends Dry van LTRs rallied for the third week in a row and settled right at 2019 levels. This was driven by a healthy uptick in load postings and a flat to slightly downward movement in truck posts. Historical seasonality indicates that market pressures should be positive over the next several weeks.

Reefers continue to outperform dry vans and have actually turned positive year-over-year this week. The seasonal trend is stronger here and reefers should benefit from the reopening of restaurants in many states.

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DAT Dry Van Load-to-Truck Ratios

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Below is our Market Conditions Index (MCI) map for dry vans. The bright spots remain in certain parts of the country. Overall, the picture is a lot more optimistic than it was just a few weeks ago.

MCI for reefer is also included in this report. Not only are the hot spots more numerous than in the dry van map, but they’re expanding to cover larger regional areas of the country, such as the Southeast.

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Rate Trends Dry van spot rates have bounced off their lows as predicted and found support at their current levels. They currently sit right around 2016 levels. The shorter-term charts show no signs of reversal in the trend, but do indicate that we may hang around at these rates until we see a more material shift in demand.

The graphs above and below show 7-day rolling, weighted averages of spot truckload rates, updated daily, and illustrated by year. The average helps to smooth out day-of-week effects, but it is plotted daily to show how things are changing in the extreme near term. DAT does not typically publish rates in this format, and as such, they will not match other figures that customers may be familiar with in our blog or other content. We are making these available to the public to help demonstrate the rapidity of changes occurring in the spot market.

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Reefer rates have seen a much more material uptick, largely driven by the onset of produce shipping and increased demand for food products and currently sitting at rates observed n 2017, with short-term support to continue higher. Seasonal pressure is strong, but there will be up and down weeks forming a jagged upward trend until late June or early July.

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Dry Van Spot Rates by Day of Year

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Looking Ahead It warrants mentioning that forecasting during this volatile and uncertain time period is difficult. Our team is working diligently to update and adjust the models, but new information becomes available at a rapid pace, which further complicates the issue. DAT would typically not publish these types of preliminary studies, but we feel that the benefit of sharing our observations far outweighs the risk. We ask that you please treat these statements and exhibits as directional and consider them as a variable in your own analyses.

Ratecast Prediction: DAT’s core forecasting model estimate showing continued optimism and rate growth. Short Term Scenario: Formerly the pessimistic model that focuses on a more near-term historical dataset.

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Reefer Spot Rates by Day of Year

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2/1/20 2/8/20 2/15/20 2/22/20 2/29/20 3/7/20 3/14/20 3/21/20 3/28/20 4/4/20 4/11/20 4/18/20 4/25/20 5/2/20 5/9/20 5/16/20 5/23/20 5/30/20 6/6/20 6/13/20

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National Spot Rate Dry Van Actuals w/ Forecast

Actual Ratecast Short Term Blended Forecast Blended Forecast v2

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Blended Scenario: More heavily weighted towards the longer-term models. Blended Scenario v2: More heavily weighted towards the shorter-term models.

The reefer models show far more optimism largely due to the strength of the seasonal component. Although we feel that the short-term models are overly optimistic, we’re hopeful that the upward trends will continue.

Our update will be refreshed next week, or sooner if conditions change materially. We recommend that readers visit dat.com/covid19 for the latest information. Any questions on this report or market conditions can be emailed to askIQ@dat.com.

We are also making available, free of charge, the DAT Daily 50 which is a daily report of the top 50 lanes by volume with a week’s worth of history and predictions using the Ratecast model.

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2/1/20 2/8/20 2/15/20 2/22/20 2/29/20 3/7/20 3/14/20 3/21/20 3/28/20 4/4/20 4/11/20 4/18/20 4/25/20 5/2/20 5/9/20 5/16/20 5/23/20 5/30/20 6/6/20 6/13/20

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