Subscribe to our free, weekly email newsletter!


Trucking news: Cass, Avondale index indicates truckload pricing remains strong

By Jeff Berman, Group News Editor
January 10, 2012

As has been the case in recent months, truckload pricing remains solid for carriers, according to the most recent edition of The Cass Truckload Linehaul Index from Cass Information Systems and Avondale Partners.

This monthly report was first released in November. It is based on actual freight invoices paid on behalf of Cass clients, which accounts for more than $17 billion annually, and uses January 2005 as its base month. Cass and Avondale said that this 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.

The base value of the index is 100, and December hit 109.2, which was ahead of November’s 108.4 and up 8.6 percent compared to December 2010. October and September hit 108.8 and 110.0, respectively. September was up 11.0 percent annually, marking the highest linehaul pricing increase from carriers since the 2005 baseline period, according to Cass and Avondale.

“Pricing for truckload carriers remains strong,” wrote Avondale managing director Donald Broughton in a research note. “Capacity remains tight and carriers are being more disciplined regarding pricing and capacity additions in this cycle. Coupled with recent positive economic data we’ve seen out of the US, the index continues to bode well for all of the truckload carriers that are capable of demanding higher pricing, and should end up foreshadowing a very strong calendar 2012 for most carriers when they start to re-bid significant amounts of their freight business in the Spring.”

Much of what is driving truckload rate increases stems from the fact that carriers are facing operational challenges and are now more focused on yield management, said Mike Regan, president and CEO of TranzAct Technologies and blogger for LM, during a recent Logistics Management webcast.

Regan said this basically means that carriers are looking at their books of business and looking at their operating ratios. If an operating ratio is over 100, Regan said carriers are going to institute corrective action to have operating ratios running at 92 or lower.

“Carriers at 105 or 110 are starting to institute corrective pricing…over 2012 and 2013 to get that operating ratio down,” said Regan. “And pending government regulations are going to affect available capacity in the carrier marketplace and drive up rates.”

In a previous research note, 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.

While Cass and Avondale are currently focusing on truckload pricing for this index, Broughton said they will also collaborate to put together similar ones for other modes in the future.

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

The Department of Commerce reported that January retail sales were up 0.2 percent compared to December and up 3.7 percent annually at $449.9 billion, and the NRF reported that January retail sales, which exclude automobiles, gas stations, and restaurants, rose 0.6 percent over December and 1.4 percent compared to January 2015.

On the freight shipments side, Cass reported that January shipments––at 1.025––trailed December by 1.3 percent and January 2016 by 0.2 percent. These declines were less than the 4.9 percent drop from November to December, though, and January shipments still topped the 1.0 mark for the 65th straight month in December.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that its Freight Transportation Services Index (TSI) saw a 0.4 percent decline from November to December, its second straight decline on the heels of a 1.0 percent decrease from October to November.

Carloads saw a 11.7 percent annual decline at 241,680, and intermodal containers and trailers rose 10.5 percent to 262,830

An amendment to the International Maritime Organization’s Safety of Life at Sea convention will go into effect requiring all shippers (importers and exporters) to certify and submit the Verified Gross Mass – the combined weight of the cargo and the container – to the steamship line and terminal operator in advance of loading the container aboard a vessel.

Comments

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


© Copyright 2016 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA