Truck capacity is booked either by spot market or through a contract rate. The spot rate is the market rate, while the contract rate is a forward contract. The advantage of a contract rate is knowing the future freight price and ensuring available truck capacity. Due to the world soybean market being dependent on unpredictable variables, such as weather patterns and government policy, the origination and destination locations are not always known a year ahead. As a result, most soybean truck volume is spot business transported by small trucking companies and farming organizations.
Actual truck freight rates per loaded mile indicate the available truck capacity and more truck drivers drove down spot rates from the August 2018 highs. With the new U.S./China trade deal being inked, volume should improve, and support the higher truck freight rates. Although higher truck rates are negative for the farmer, higher truck rates due to more soybean export demand is positive.
Alan Barrett
Director of Research and Consulting
Higby Barrett LLC
Alan Barrett is the Director of Research and Consulting for HIgby Barrett LLC. He is an accomplished commodity economist with more than 25 years of experience in futures and cash markets with a focus on cotton, commodity projects, non-traditional agricultural products, transportation and supply chain studies. Alan spent six years as a commodity futures broker. His expertise encompasses feasibility studies of oilseed crushing plants (soybean canola, and cottonseed), grain elevators, export elevators, shuttle elevators, grain container operations, flourmills and other processing facilities. Alan also has conducted transportation supply chain studies for grains, oilseeds, fertilizer, coal, natural gas, crude oil, and petroleum products. Alan has considerable experience in non-traditional agricultural products such as coal, coke, natural gas, chemicals, hydraulic fracturing fluid, hydraulic fracturing proppants, glycerin, fertilizer, micronutrients, salt, limestone, cement, iron ore, pig iron, and steel, especially feed ingredients. Mr. Barrett has a BS and MS in Agricultural Economics from the University of Tennessee.
