Survey: Shippers may cut transportation spending
By James Cooke -- Logistics Management, 6/1/2004
Results of a recent survey of purchasing professionals indicate that shippers may be planning to rein in their transportation spending this summer in an effort to control rising freight costs.
For the last two months, Purchasing Magazine's differential index of transportation buying plans, which measures the pace of spending on transportation services, has declined. That drop-off follows several months of increases. (See chart at right.)
"Freight spending is on the threshold of a slide," says Executive Editor Thomas Stundza.
To obtain that data, Purchasing, a sister publication to Logistics Management, surveyed some 1,500 readers about their transportation spending plans for the coming months.
A fall-off in transportation spending would represent a marked change from the situation earlier this year. As companies began restocking diminished inventories during the first quarter of 2004, they placed heavy demands on transportation to move raw materials and finished goods.
"It was the fastest growth in three years, and no one was prepared," says Stundza.
Now, however, the surge in demand that hit suppliers in January and February has started to abate. Companies are starting to get their arms around demand, and they could be in a position to moderate their transportation spending, Stundza says.
Respondents to the Purchasing survey also reported that they had seen a steady rise in transportation prices across all modes during the past year. Eighty percent, moreover, said they had paid higher rates for transportation services during the month of May.
The majority of survey participants (68 percent) said they are expecting further price increases in the next three months. One respondent—Paul Everett, general manager at Omega Steel in St. Louis—said his truckload rates had risen from $1.30 per mile four months ago to as high as $1.70 this month.
"Trucking costs keep going up," said Everett, whose company ships steel pipe and tubing. "It's tough getting trucks anywhere."
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