# Spot (linehaul) to contract rate spread (RATES, RATES12, RATES20)

FreightWaves Customer SuccessFreightWaves National Indices

What is it?

The difference between spot and contract dry van rates at a national level excluding estimated fuel costs. It is based on the National Trucking Index less the cost of fuel at various levels (NTIL, NTIL12, NTIL20) and FreightWaves van contract rate data initial report (VCRPM1), which is a  lagging index (14-day lag). The rate spreads are offered in three granularities:

• RATES = NTIL – VCRPM1 – This calculation removes the total estimated cost of fuel from the spot rate.
• RATES12 = NTIL12 – VCRPM1 – This calculation assumes the carrier passes along a portion of the fuel costs starting at \$1.20 per gallon.
• RATES20 = NTIL20 – VCRPM1 – This calculation assumes the carrier passes along a portion of the fuel costs starting at \$2.00 per gallon.

Example: On February 1, 2022, the NTI was \$3.43 per mile, the national average retail fuel cost (DTS) was \$3.76/gal and the average van contract rate (VCRPM1) was \$2.82 per mile:

RATES = Spot rate – fuel cost – contract rate = \$3.43 – (\$3.76/6.5mpg) – \$2.82 = \$0.03/mile

RATES12 = Spot rate – fuel cost – contract rate = \$3.43 – ((\$3.76-\$1.20)/6.5mpg) – \$2.82 = \$0.22 per mile

RATES20 = Spot rate – fuel cost – contract rate = \$3.43 – ((\$3.76-\$2.00)/6.5mpg) – \$2.82 = \$0.34 per mile

Who is interested?

Anyone that has an interest in trucking market activity in the U.S., especially trucking pricing.

What does it tell me?

The RATES indices estimate the discounts or premiums that shippers are getting by moving freight on the spot market rather than under long-term contracts. When RATES is a positive value, trucking capacity is relatively tight with upward pressure on contract rates if sustained. If RATES is negative then there is downward pressure on contract rates.

The RATES12 and RATES20 variations reduce the impact of fuel costs on spot rates by assuming some portion of the fuel cost is baked into the linehaul or base rate. RATES12 starts applying fuel costs when the average retail price of fuel is \$1.20 per gallon and RATES20 starts when it is \$2.00.