| Rates for hauling truck cargo rose in June, continuing an upward trend in a market where demand continues to exceed supply. But in recent months the space on trucks has expanded slightly and freight rates are beginning to flatten out, analysts said. The Cass Truckload Linehaul Index, published monthly by payment services companyCass Information Systems Inc. and investment firm Avondale Partners LLC, showed a rise in per-mile truckload rates of 3.6% year over year in June. For the same month last year, rates were up 5.2% from the previous year. |  |
Analysts said they expect the index will continue to make “mid-to-high single digit gains,” increasing between 4% and 9% in 2015.
Donald Broughton of Avondale Partners said last June trucking companies were “dramatically overbooked.” But companies have hired additional drivers, offered pay increases to keep those drivers around, and invested in newer trucks—all of which has grown trucking capacity.
Many of the new drivers, Mr. Broughton said, became available as work dried up in the oil industry. And as companies acquire new trucks, bringing down the average age of their fleets, fewer get stuck in the shop for repairs and maintenance.
The Cass Index looks at spot pricing and doesn’t include contract rates, which account for at least 95% of freight among public companies. Mr. Broughton said contract pricing is “strong” this year as spot pricing has been “relatively flat.”
Also published Wednesday, Cass’s Intermodal Price Index, measuring rates for container transport via rail and road, fell 2.8% in June from 2014. It was the sixth month in a row with year-over-year declines.
Avondale analysts said that fuel surcharges in trucking, which have declined $0.20 per mile in the last year, are likely drawing shippers away from intermodal. Still, available space on trucks remains tight and as long as demand outstrips supply, prices will reflect that.
“It’s simple, straightforward economics,” Mr. Broughton said.
Source: WallStreetJournal
Donald Broughton of Avondale Partners said last June trucking companies were “dramatically overbooked.” But companies have hired additional drivers, offered pay increases to keep those drivers around, and invested in newer trucks—all of which has grown trucking capacity.
Many of the new drivers, Mr. Broughton said, became available as work dried up in the oil industry. And as companies acquire new trucks, bringing down the average age of their fleets, fewer get stuck in the shop for repairs and maintenance.
The Cass Index looks at spot pricing and doesn’t include contract rates, which account for at least 95% of freight among public companies. Mr. Broughton said contract pricing is “strong” this year as spot pricing has been “relatively flat.”
Also published Wednesday, Cass’s Intermodal Price Index, measuring rates for container transport via rail and road, fell 2.8% in June from 2014. It was the sixth month in a row with year-over-year declines.
Avondale analysts said that fuel surcharges in trucking, which have declined $0.20 per mile in the last year, are likely drawing shippers away from intermodal. Still, available space on trucks remains tight and as long as demand outstrips supply, prices will reflect that.
“It’s simple, straightforward economics,” Mr. Broughton said.
Source: WallStreetJournal
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