Subscribe to our free, weekly email newsletter!


Truckload pricing on upward path, says new index from Cass Information Systems and Avondale Partners

By Jeff Berman, Group News Editor
November 11, 2011

A new indicator for truckload pricing, which was recently introduced by Cass Information Systems, the largest payer of freight bills with more than $17 billion in annual freight spend, and investment firm Avondale Partners, disclosed this week that per-mile truckload pricing saw significant gains in October.

Cass and Avondale said that this report is based on actual freight invoices paid on behalf of Cass clients, which accounted for more than $17 billion in 2010, and uses January 2005 as its base month. And they added 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.

Entitled the Cass Truckload Lineaul Index, the report stated that with the index valued at 108.8 in October—with a base value of 100—truckload pricing was up 9.8 percent in October. While this is an impressive annual increase, it falls short of September’s 111.0 index reading and annual pricing growth of 11.0 percent, which is the highest linehaul pricing increase from carriers since the 2005 baseline period, according to Cass and Avondale.

The report’s authors noted that October’s gains “reaffirms that capacity remains tight and carriers are being more disciplined regarding pricing and capacity additions in this cycle.” This has been the case for several months, given that tight capacity has created an environment in which carriers have regained leverage on the pricing side, following a particularly difficult 2009 and into 2010, which saw carriers take deep discounts at a time when there was more excess capacity.

Donald Broughton, Avondale Partners managing director, wrote in an October research note 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

FTR says both spot rates and contract rates are heading up in a full capacity environment and with the fall shipping season rapidly approaching, it explained conditions for shippers could further deteriorate.

Read how others are using Business Process Management to achieve ERP success with Microsoft Dynamics AX. Download the free white paper now.

Now that Congress has issued another highway funding Band-Aid – a $10.9 billion highway bill through next May that former Transportation Secretary Ray LaHood blasted as “totally inadequate” – what can we expect as the infamously do-nothing 113th Congress winds down in the next month before taking yet another recess to prep for the mid-term elections?

Seasonally-adjusted (SA) for-hire truck tonnage in July headed up 1.3 percent on the heels of a 0.8 percent increase in June. The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, was 133.3 in July, which outpaced June’s 132.3 by 0.8 percent, and was up 2.8 percent annually.

Volumes for the month of July at the Port of Long Beach (POLB) and the Port of Los Angeles (POLA) were mixed, according to data recently issued by the ports. Unlike May and June, which saw higher than usual seasonal volumes, due to the West Coast port labor situation, July was down as retailers had completed filling inventories for back-to-school shopping.

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