January truckload and intermodal rates slightly differ, says Cass and Avondale data

The most recent edition of the Truckload and Intermodal Cost Indexes from Cass Information Systems and Avondale Partners showed that truckload and intermodal rates for the month of January were mixed.

This pricing data is part of the Cass Truckload Linehaul Index and the Cass Intermodal Linehaul Index, which were both created in late 2011. The indices are based on actual freight invoices paid on behalf of Cass clients, which accounts for more than $23 billion annually and uses 2005 as its base month.

Cass and Avondale said the truckload index “isolates” the linehaul component of full truckload costs from other components such as fuel and accessorials, which in turn provides an accurate reflection of trends in baseline truckload prices.

In a previous research note, Avondale analyst Donald Broughton explained that the objective of this index was to deliver a more timely barometer of truckload pricing than the one provided by the American Trucking Associations (ATA), which does not fully “remove the effect of diesel in its revenue per mile series,” adding that the ATA’s revenue per mile series—on both a seasonally-adjusted or non-seasonally adjusted basis—tracks more closely with Cass’ Truckload Total Cost (per mile) Index, which is more sensitive to changes in diesel than with Cass’ Truckload Linehaul (per mile) Index. He added that whereas the ATA reports truckload pricing roughly 45 days after the end of the month, Cass data is ready to be analyzed three-to-five days after the end of the month.

“The fact that Cass processes $17 billion in freight bills annually is significant,” Broughton told LM in an interview. “The biggest concern initially when putting this together was protecting confidential information of Cass’ customers, as many of them compete directly with each other and do not want each other to have access to their respective freight spend. Once that was taken care of it is a matter of going through the data and delineating it to strip out accessorial and fuel-related charges.”
Removing fuel from the equation provides a better gauge of actual base prices, too, for both shippers and carriers, in that it provides a better baseline for gauging rates, said Broughton.

Truckload rates in January, which measure linehaul rates only, saw a 0.4 percent annual gain, which the report said marks the fifth straight month of waning truckload pricing strength.

“[S]oftening demand and increasing capacity are posing downside risks to their previously forecasted 1% to 3% increases this year,” the report explained. “Avondale also referenced other factors providing downward pricing pressure, including carrier bankruptcies at historic lows, truck counts up by single digits and the relaxation of the of the 34 hour restart rule.”

Industry executives have said that with GDP currently around 2.5 percent rates are likely to remain lower than they would be if the economy was growing at a faster clip.

And were GDP expand to 3-3.5 percent, executives maintain there would be a legitimate over the road capacity crisis, whereas capacity is loose compared to where it was a year ago at this time.

The Cass Intermodal Price Index saw a 2.2 percent decline in January, following a 3.8 percent decline in December and a 2.4 percent decline in November.

“We expect intermodal rates will continue to decline in 2016 as the dramatic drop in diesel prices … takes its toll on U.S. domestic demand,” stated Avondale Partners. Consequently, “the ~$0.35 a mile decline in fuel surcharges collected by truckers in the last year and a half has to challenge demand and pricing power for domestic intermodal.”