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Loadsmart's monthly rate is calculated as the average rate-per-mile paid to carriers for hauling loads outbounding from the 30 Key Market Areas (KMAs) shown in Figure 1.
Figure 1
Why do we only use loads outbounding from those areas?
Our selection of these KMAs is strategic. It stems from our desire to evaluate prices where the spot market is most active and competitive. We expect our prices to be more reflective of the market where there is competition.
In less active outbound regions, rates can vary due to local conditions unrelated to broader industry trends. For example, in a less active area, shippers may pay a premium to find a carrier, or the carrier may accept lower rates just to leave the area.
We also filter for hauls between 250 and 1,250 miles, which we consider "medium" hauls, to ensure that our index accurately reflects actual market trends rather than fluctuations caused by varying trip lengths. Carrier rates per mile can vary significantly depending on the distance of a haul: shorter hauls often have higher rates per mile than longer ones. By focusing only on "medium" hauls, we aim to avoid skewing our rate index.
How do we know if this rate reflects actual market trends?
We benchmark our rate with Sonar's OTVI, a well-known demand indicator for the truckload market. Our rate closely tracks Sonar's OTRI, as shown in Figure 2, confirming that our rate accurately reflects broader market dynamics.
Figure 2