Home Construction Drives Up Flatbed Demand

Every new home requires materials, equipment, and components that must travel many steps in the supply chain process to ultimately end up at the construction site. The recent residential construction boom is driving up the demand for flatbed carriers which are ideal for transporting construction and manufacturing materials. In fact, new home construction rates are viewed as a leading indicator of flatbed truck demand. Let’s explore the construction demand, its impact on the flatbed market in 2021 and 2022, and how freight companies should react. 

Construction Demand in 2021-2022

Many construction projects were canceled or postponed in 2020, due to the onset of the COVID-19 pandemic. In 2021, delayed projects were eagerly resumed as restrictions were lifted and the construction market stabilized. Additionally, large numbers of urban dwellers that had savings and substantial incomes moved to the suburbs and rural areas. Furthermore, low interest rates made home buying more accessible. This momentous increase in demand caused prices for labor and materials to skyrocket.

Now, residential construction spending continues to steadily increase. In April 2021, the rate of new home construction in the United States was 67% higher than in April 2020. In 2022, the projected number of new single-family homes is estimated to reach 1.2 million new constructions, up from just over 1.1 million new constructions in 2021. 

A lack of inventory is currently the biggest concern for the housing sector. As construction projects increase, the prices for materials have increased as well. Environmental regulations, a shortage of shipping containers, and speculative buying are factors amid the increased demand and constrained supply. In 2022, higher interest rates may decrease the affordability of housing. 

Construction Demand’s Impact on the Flatbed Market 2021

According to DAT Freight & Analytics, at the beginning of 2021, the flatbed load-to-truck ratio was just under 48%. In the spring, the ratio peaked at 97%. 2021 ended with a flatbed load-to-truck ratio of 51%. 

The year of 2021 was filled with major events that caused significant disruptions. In February and March, temperatures dropped to record lows in Texas, prompting many manufacturing plants to shut down. In March, the Suez Canal was obstructed for 6 days which resulted in many shipping bottlenecks. Wildfires and rising fuel prices also impacted the supply chain, and consequently the flatbed market. 

Historically, many companies have relied upon materials sourced from global manufacturers. Natural disasters, supply chain disruptions, and other calamities render these goods completely unavailable or extensively delayed. To adjust, companies have shifted to sourcing materials from suppliers located close by. This pivot to regionally based suppliers increased demand on smaller supply chains. This has brought about a resurgence in flatbed shipping, particularly for the types of materials required in home construction. 

Construction Demand’s Impact on the Flatbed Market 2022

According to DAT Freight & Analytics, at the beginning of 2022, the flatbed load-to-truck ratio was just shy of 87%. From January 2021 to January 2022, the flatbed spot rates have increased 25.7%. With the elevated demand for construction, there are still projects on pause until materials can be sourced, shipped, and delivered. The Associated Builders and Contractors recently reported that the current construction backlog is 8 months, and that 66% of contractors have optimistic sales expectations. 

The demand for construction is high and industrial production remains equally healthy. 

Looking forward to construction demand’s impact on the flatbed market in 2022, the number of flatbed loads is likely to continue to exceed the number of drivers and trucks. Flatbed truck demand in 2022 places pressure on freight companies to higher drivers, source more trucks, and optimize load-to-truck ratios. 

How Should Freight Companies React

The demand for flatbed truck transportation is high, and is expected to remain this way for the foreseeable future. The ongoing capacity constraints are likely to continue to result in strong freight business. Throughout the spring as temperatures increase, the weather will be ideal for construction and demand for flatbed trucks will continue to rise. One strategy freight companies can adopt to react to flatbed demand 2022, is to increase their driver recruitment and retention efforts with competitive salaries and benefits, safety incentives, and other perks. Another strategy is to raise the prices for flatbed freight transportation to cover the increased labor, fuel, and equipment costs. Furthermore, taking steps to assess and improve operations can help freight companies meet the demands of the flatbed market. 

For over 60 years, First Star Logistics has been innovating solutions to global logistics challenges. As a unique, asset-based logistics provider, First Star Logistics is committed to transporting freight between states and countries. Clients benefit from a comprehensive North American network and global reach, along with time and money-saving technologies. For the best services that the freight industry can offer, contact First Star Logistics today!