Rate update

Data from Cass Information Systems in conjunction with investment firm Avondale Partners mostly showed gains for both truckload and intermodal rates in April.

By ·

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, 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. Contact Jeff Berman

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!

Article Topics

Intermodal · Rates · Trucking · All Topics
Hub Group Resources
Not Your Grandfather's Intermodal
Transportation of freight in containers was first recorded around 1780 to move coal along England’s Bridgewater Canal. However, "modern" intermodal rail service by a major U.S. railroad only dates back to 1936. Malcom McLean’s Sea-Land Service significantly advanced intermodalism, showing how freight could be loaded into a “container” and moved by two or more modes economically and conveniently. As with all new technologies, there were problems that slowed the growth, which influenced many potential customers to shy away from moving intermodal.
Click here to download
Latest Whitepaper
The Essential Guide to High Value, Low TCO WMS on the Fast Track
A warehouse could become your weakest link if you can’t execute with speed and accuracy. Your bottom line will be negatively impacted, so will your customer’s experience, and they are only one click away from buying from your competitors!
Download Today!
From the November 2017 Logistics Management Magazine Issue
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships into true, collaborative partnerships—and greatly strengthened its logistics and supply chain operations in the process.
34th Annual Quest for Quality Awards: 2017 Awards Dinner
Trucking Regulations: Washington U-Turns; States put hammer down
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Make Your Products Smarter in the Supply Chain with the IoT
This webinar explores how temperature-sensing smart labels and inexpensive NFC tags are being used to extend product safety and efficiency beyond the shipping dock while also building a communication bridge to your customers.
Register Today!
EDITORS' PICKS
2017 NASSTRAC Shipper of the Year: Mallinckrodt; Mastering and managing complexity
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships...
2017 Alliance Awards: Recognizing outstanding supply chain partnerships
In an era where effective supply chain collaboration is both highly valued and elusive, Logistics...

26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...