Truckload and intermodal rates are mixed in January, according to Cass and Avondale report

The most recent edition of the Truckload and Intermodal Cost Indexes from Cass Information Systems and Avondale Partners, which were released this week, 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 $26 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.

Truckload rates for the month of January, which measures truckload linehaul rates paid during the month, saw a 7.9 percent annual hike.

The report’s authors explained that as demand shows improvement in tandem with capacity remaining very tight, it stands to reason that contract rate increases are likely to continue to come in at higher levels.

“We see truckload pricing increasing between 4 percent and 9 percent in 2015,” depending on how much rate increase each carrier was successful in obtaining and when those rate increases were achieved,” said Avondale Partners in the report.

As previously reported, the fact that capacity remains tight is not a huge surprise, given the myriad challenges motor carriers are facing, including: the economy; driver hiring, availability, training and retention; demand; and the increasing amount of regulations the industry faces, among others.

Intermodal rates in January dropped 0.3 percent compared to January 2014, which the report pointed out marks the first annual intermodal pricing decline since December 2013.

This could serve as a sign of things to come, according to Cass and Avondale, as intermodal rates are expected to dip in 2015, given the cumulative declines in diesel prices in recent months, which equates to a more than 15 cent per mile decline in fuel surcharges and an even steeper decrease in oil prices expected to challenge intermodal demand and pricing power, too. And they also said that “the extent to which modes are shifted to truckload will be dependent on capacity availability.”

When the Truckload Line haul Index was first introduced in November 2011, Avondale Partners 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’  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 Line haul (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 [$26] 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.”