Subscribe to our free, weekly email newsletter!



Rate update

By Jeff Berman, Group News Editor
May 11, 2012

If you are a shipper, you already know this, but it is my job to report on it anyhow. Data from Cass Information Systems in conjunction with investment firm Avondale Partners mostly showed gains for both truckload and intermodal rates in April.

First, the truckload data. Cass and Avondale reported that April truckload linehaul rates were flat when compared to March and up 6.9 percent annually, which was slightly below a 7.2 percent annual hike in March.

The organizations explained that rates “have likely moderated due to a share shift towards intermodal.” That sentiment is not entirely surprising, given how strong domestic intermodal has been over the last several quarters. The combination of lower rates, coupled with truck-like service, albeit with longer transit times, continues to make sense for many shippers, and why shouldn’t it really?

Still not sold on intermodal? Then consider this analysis from Avondale Partners: “We continue to believe 6-9 percent rate increases are possible for 2012 as capacity continues to slowly tighten and demand for truckload services continues to increase.”

And as we all know, capacity is clearly impacted by government regulation—of which there is not shortage of in the truckload sector. With regards to truck drivers hours-of-service regulations set to take effect in mid-2013, many carriers are saying that it will add to transit times, while not adding capacity. How is that productive? Don’t ask me. I don’t work for the government.

In fact, at last week’s NASSTRAC Logistics Conference & Expo, U.S. Xpress President John White said that the pending HOS changes could eventually result in a 3-to-5 percent utility drop or even more.

And he added that his company is looking for 5-to-7 percent rate increases in its lanes.

“The era of managing costs down on the truckload side is almost a tsunami relative to the costs we are faced with,” he said. “In the last 1.5 years, we have dropped idle by about 40 percent and on top of that have dropped dead-head by about 15 percent. But yet on a 500-mile move because of fuel costs, the cost to move a load is up by about $5 per load, despite these significant idle and deadhead reductions.”

All these things, along with some others, factor into the estimated rate hike to be certain.

Looking at intermodal rates, Cass and Avondale reported that intermodal linehaul rates were up 2.1 percent from March to April and up 2.4 percent annually. They noted that the increasing prices in intermodal are further evidence of growing demand created by the share shift from truckload.

Even though intermodal prices are still trending up, it is not at the same rate as truckload.

This analysis by Avondale helps to explain why that is the case:

“We believe that intermodal service providers could see some modest gains in pricing in the near term due to high fuel prices, however we continue to believe that over the intermediate term, the large number of containers coming on line and aggressive pricing by carriers focused on ramping up their intermodal businesses will keep pricing grounded.”

Regardless of what mode you use, you need to be prepared to pay more. It is a fact. The best way to prepare for this, experts say, is to do your homework and be prepared to budget for these hikes into your transportation and logistics budgets.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years. That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics Report at last week’s CSCMP Annual Conference in San Antonio.

Matching last week, the average price per gallon of diesel gasoline dropped 2.3 cents, bringing the average price per gallon to $3.755 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

A number of key topics impacting the freight transportation and logistics marketplace were front and center at a panel at the Council of Supply Chain Management Annual Conference in San Antonio last week.

The relationships between third-party logistics (3PL) service providers and shippers are seeing ongoing developments due in large part to the continuing emergence and sophistication of omni-channel retailing. That was one of the key findings of The 19th Annual Third-Party Logistics Study, which was released by consultancy Capgemini Group, Penn State University, and Korn/Ferry International, a global talent advisory firm.

Optimism in the form of increasing profits was a key takeaway in the Annual Survey of Third-Party Logistics (3PL) CEOs, released earlier this week at the Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Antonio.

Article Topics

Blogs · Trucking · Intermodal · Rates · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA