Episode 2: Freight Data Explained: Rates, Seasonality, and Market Signals with Avery Vise

How to Read Freight Market Data Without Getting Fooled by Seasonality

[00:00:00] Avery Vise: There are too many people out there who don’t understand that they’re losing money every time they do something. Profit is more important than growth. It doesn’t help me to double the size of my fleet if I’m losing a little bit on every single load.

[00:00:17] Todd Waldron: Welcome to this week’s episode of Behind the Freight. I’m Todd Waldron, joined by my usual co-host, John Howland. On today’s episode, we have a very special guest and a dear friend of myself and truckstop.com.

[00:00:17] Todd Waldron: We’re joined by Mr. Avery Vise, VP of trucking at FTR Transportation Intelligence, one of today’s leading analysts in the trucking industry. Avery spent many years studying freight markets, capacity trends, and the forces shaping today’s trucking environment.

[00:00:17] Todd Waldron: He’s also the author of FTR’s Trucking Update Reports and host of the Trucking Market Update podcast. Today, we’re going to talk about marketing data, some background on Avery and FTR, and the relationship with Truckstop.

[00:00:17] Todd Waldron: We’re going to try to clear up some common misconceptions around rates and get Avery’s perspective on things happening in the industry today and the things he’s seen along the way. Avery, thank you for joining us; it’s great to have you.

[00:01:19] Avery Vise: Thanks, Todd and John.

[00:01:21] John Howland: To piggyback on what Todd said, Avery is the wizard. This is going to be fun. Avery, we really appreciate you being on.

[00:01:31] Avery Vise: Absolutely.

[00:01:32] Todd Waldron: For listeners meeting you for the first time on today’s episode, Avery, how do you describe what you do in the trucking industry?

[00:01:39] Avery Vise: I call myself an analyst. I spend all day looking at data, reading, and talking to people in the industry to come together with a narrative of what’s going on and what is likely to happen.

[00:01:39] Avery Vise: I’m different than the people who focus on day trading in trucking, meaning the best tactical move today or this week. Our horizon is measured in quarters and years rather than months.

[00:01:39] Avery Vise: Our role is to assimilate these larger economic trends and convert them into an actual forecast for volume, capacity, and rates. It is to understand where things are going a year from now as opposed to where we’ll be tomorrow.

[00:01:39] Avery Vise: My job is to look at the data we’re generating at FTR, the spot market data, and especially the general economic data, to make sense of that in a way that is relevant to brokers, carriers, and shippers.

[00:02:53] John Howland: That is amazing. I know you’ve been around for a long time in this industry. I’m curious; what was it that originally drew you into transportation?

[00:03:04] Avery Vise: Like many people, it was happenstance. Right out of college, I got a job as an editorial assistant at an airline industry publication. That turned into a full-time job as a congressional editor of a publication called Aviation Daily.

[00:03:04] Avery Vise: I was covering Congress regarding commercial airlines, commercial aircraft, and airports. I did that for about twelve or thirteen years. For family reasons, my wife and I wanted to come back to Alabama.

[00:03:04] Avery Vise: I had an opportunity pop up in Tuscaloosa, Alabama, at a company called Randall Publishing to launch a small fleet publication. I worked with Brent Hutto from the beginning there, and we actually worked together for about fifteen years.

[00:03:04] Avery Vise: Because of availability, I ended up making the move into trucking twenty-eight years ago.

[00:04:24] Todd Waldron: Where does time go? My question is how did you survive fifteen years working with Brent Hutto?

[00:04:29] Avery Vise: It was not easy; there were a couple of times where it was difficult. He was a good salesman, and he would sell things that were difficult to actually accomplish and that I then had to deal with.

[00:04:29] Avery Vise: But I really enjoyed working with him all those years. FTR has been working with truckstop.com since before I joined FTR, so I’ve been working with Brent for almost all of my career.

[00:04:58] Todd Waldron: That’s awesome. He really is great. Is there an early moment or role that stood out as memorable about your perspective and perception of the industry?

[00:05:17] Avery Vise: In the first publication we launched in 1998, called Trucking Company magazine, we had a page in the back where we asked what you look for in drivers. One response was that they have to be able to breathe.

[00:05:17] Avery Vise: The guy was joking, but it eventually instilled in me that your success in trucking is tied to the performance of your dumbest competitor. If you are competing against stupid people with low standards, it can hurt you.

[00:05:17] Avery Vise: You’re only as good as your lowest common denominator. That important point informs how I approach my own job.

[00:06:32] John Howland: Awesome nugget there for sure. You’ve been on both the journalism side and the market intelligence side. How does that transition shape the way you approach the trucking industry today?

[00:06:51] Avery Vise: In a lot of ways, it is the same discipline as long as it’s being done to be analytical and inform people. I had the good fortune of starting my career in journalism before there was an Internet and people actually read large passages.

[00:06:51] Avery Vise: I viewed my job as trying to illuminate what’s different and changing. When a driver shortage or high fuel prices happen, that’s news today, but tomorrow it is not. Tomorrow’s goal is to find what’s new and dig deeper.

[00:06:51] Avery Vise: It’s the same discipline required to be an analyst. That transition happened while I was the chief editor of Commercial Carrier Journal. I had moved into a market intelligence role before I even left the company.

[00:08:00] Todd Waldron: What’s one misunderstanding that people outside of the industry often have about trucking?

[00:08:17] Avery Vise: Coming from the airline industry, my initial thought was that trucking is going to be real easy. I thought it was just moving stuff from point A to point B.

[00:08:17] Avery Vise: While that is what an actual driver deals with, the broad industry is at least as complicated as the passenger airline industry. Airlines have a finite number of airports, but that isn’t true in transportation.

[00:08:17] Avery Vise: There are infinite city pairs and the logistics involved in making sure things are where they’re supposed to be is intense. The biggest misconception is that you just get in a truck, go somewhere, and unload it.

[00:09:19] John Howland: Way more than that. The industry is way more complex than the average person gives it credit for. Todd and I know truckstop.com works with you and the FTR team on Spot Market Insights.

[00:09:43] John Howland: For those listeners who don’t know, can you give us a brief description of the Spot Market Insights?

[00:09:49] Avery Vise: Once a week, we take all of the data that occurs twenty-four-seven within the truckstop.com system and make some sense of it. I look at it at the national level and the regional level if there are differences.

[00:09:49] Avery Vise: I focus on rates, because that’s where the rubber hits the road, and volume. I try to give a sense of why this is happening. Almost everything else I do has a quarterly or annual horizon, but Spot Market Insights is the exception.

[00:09:49] Avery Vise: In the fall, we launched granular data at a regional level that goes even more sliced and diced. We look at equipment type and whether we’re talking about full truckload, partial truckload, or LTL.

[00:09:49] Avery Vise: That allows the user to go in and customize. You can look at the region and equipment type and play around with where rates are doing better than what you’re currently getting.

[00:11:40] Todd Waldron: It’s been super informative throughout my career. In my time leading carriers, I struggled to understand all these different data points. How should carriers or brokers interpret what they’re seeing in Spot Market Insights properly?

[00:12:32] Avery Vise: We don’t seasonally adjust the data. We’re presenting the all-in broker posted rate and the load index as they are. We plot that against a five-year average to give you a bit of a sense of the market.

[00:12:32] Avery Vise: The biggest thing people need to understand is seasonality. We always see an increase in applications for operating authority around February. That is because rates go through the roof in late December.

[00:12:32] Avery Vise: People see those rates and think the market is turning. You have to understand that rates always go up in December, late June, and around Thanksgiving, especially in refrigerated.

[00:12:32] Avery Vise: Don’t just look at what happened week over week. You have to see what happened last year and if that number was tainted by a specific problem. Savvy people generally pick up on that.

[00:14:29] John Howland: Agreed. What should smaller carriers out there be paying attention to in the spot market trends that are most often overlooked or misunderstood?

[00:14:44] Avery Vise: I focus on what’s happening with rates in each equipment type. People look at loads, but things that cause a shift from contract to spot don’t necessarily mean a lot in terms of rates.

[00:14:44] Avery Vise: Smart carriers need to be especially focused on the rate side while taking what fuel is doing into account. You have to take volume into account because rates only mean something if there’s a lot of freight.

[00:14:44] Avery Vise: We weight these broad numbers because a huge rate with only five loads is not going to make any difference in the overall. We tend to avoid getting too granular because that only helps if you’re in a position to take advantage of it.

[00:16:24] Todd Waldron: It’s such a challenge with so many components, from rate per mile to length of haul and fuel. For small carriers, realize that this data isn’t verbatim rate per mile, but a directional reference.

[00:16:24] Todd Waldron: What are the key indicators that you personally watch when trying to understand where the market is heading?

[00:17:28] Avery Vise: In our forecasting model, we’re looking at hundreds of indicators. To look at the broad data personally, I look at manufacturing output, especially excluding high-tech, which does not produce much freight.

[00:17:28] Avery Vise: I also look at consumer spending on goods and housing starts. Existing home sales are very meaningful for flatbed and dry van operators. Inventory to sales ratios have become less meaningful recently.

[00:17:28] Avery Vise: Manufacturing is what drives trucking; where manufacturing goes, trucking follows. That has been the case for carriers for the last three years. Capacity is a big issue, alongside sluggishness in the manufacturing sector.

[00:19:03] Todd Waldron: Almost every index you mentioned has an “except” or a “but.”

[00:19:10] Avery Vise: That’s why people like me exist. If you could reduce it to four metrics, you wouldn’t need FTR. Every day in our Slack channel, we debate a couple of dozen things to see if they actually mean anything.

[00:19:10] Avery Vise: I was accused of being the king of the disclaimer. My job is to tell you how I see things, and usually there are caveats. Those caveats matter because they can be geographical or sector-specific.

[00:19:10] Avery Vise: Another misconception is that trucking is one thing. People want granular benchmarks for dry van contract data with multiple stops, but that kind of granularity isn’t always available without extreme investment.

[00:19:10] Avery Vise: You have to live with broad metrics to understand things and then drill down to adjust for your specific service level. It is a very nuanced and complicated thing.

[00:21:42] John Howland: For those smaller carriers and owner-operators, what signals should they be paying attention to in the coming months?

[00:21:59] Avery Vise: The spot market is much more relevant as a signal the smaller you are. An owner-operator isn’t going to pay for our expensive products, so they need something they can digest.

[00:21:59] Avery Vise: We’re making Spot Market Insights available at no cost as a service to the industry. If you can, keep up with indicators most relevant to your type of haul.

[00:21:59] Avery Vise: Flatbed carriers should look at manufacturing and primary metal products. Refrigerated is tied to agriculture and food metrics from the Census Bureau and the Bureau of Economic Analysis.

[00:23:28] Todd Waldron: Is there any trend or shift in the trucking industry that people might not be paying enough attention to yet?

[00:23:41] Avery Vise: Artificial intelligence is driving the economy and the freight economy. If you look at industrial production and especially nonresidential construction, you’ll see why.

[00:23:41] Avery Vise: Investments in data centers and semiconductor manufacturing facilities are propping up that segment of the economy. Construction of these data centers is producing a lot of freight.

[00:23:41] Avery Vise: You have to pay attention to when that trend line starts to level off. Flatbed carriers will then need to start diversifying. Also, look at pharmaceuticals in the nondurable goods sector.

[00:23:41] Avery Vise: If you take pharmaceuticals and computers out of consumer spending, growth isn’t really there. Things driving our economic growth right now are often not producing freight.

[00:23:41] Avery Vise: That is a large part of why we’ve been in a freight rate recession for the past two or three years. We built up way too much capacity in 2022.

[00:26:28] John Howland: If you could instantly fix or change one problem the trucking industry has, what would that be?

[00:26:50] Avery Vise: I would instill in every stakeholder a basic understanding of economics. There are too many people who don’t understand they’re losing money every time they do something.

[00:26:50] Avery Vise: If you are undercutting the market with dumb decisions, it hurts everyone. We still have 33% more carriers in the market than we had before the pandemic.

[00:26:50] Avery Vise: All that capacity gets aggregated and affects the market. Profit is more important than growth. It doesn’t help me to double my fleet if I’m losing on every single load.

[00:28:16] Todd Waldron: What’s a book, podcast, or newsletter that you recommend to people in freight?

[00:28:35] Avery Vise: The first thing I read every day is The Wall Street Journal’s logistics report. It’s available for free and provides headlines linking to many sources.

[00:28:35] Avery Vise: You can get a good briefing every day by reading those headlines. I also recommend Trucking Market Update, launched every Tuesday on your favorite platform.

[00:29:09] John Howland: If animals could drive trucks, which animal do you think would be the best driver?

[00:29:21] Avery Vise: I’m going to have to go with something practical. It’s gotta be a primate because they’ve gotta be able to grab the steering wheel. I’ll go with a chimpanzee.

[00:29:50] John Howland: The problem with the chimpanzee is they’d be monkeying around the whole time!

[00:30:03] Todd Waldron: Avery is going to be a regular guest with us monthly to talk about market updates. This has been great.

[00:30:25] John Howland: A key takeaway for me is to take a step back and look at the broader data. Use market data as a guidepost, but do your due diligence to really understand it.

[00:30:46] Todd Waldron: Avery, where can people find more from you?

[00:30:59] Avery Vise: You can find Spot Market Insights at spot.ftrintel.com. If you go to ftrintel.com, you can find links to many other resources, including my podcast.

[00:31:19] Todd Waldron: Thank you for being with us today. If today’s episode helped you, share it with someone who needs to hear it. For tools to keep your truck rolling, visit truckstop.com.

[00:31:59] Todd Waldron: Explore the load board, rate insights, and risk management solutions. Until next time, keep the wheels turning and the bad loads burning.