Economic conditions continue to be mixed, but trucking indicators continue to be more positive than the recently reported contraction in overall U.S. economic activity. That just means, as usual, truck freight and rates can be hit and miss, depending on markets, customers and lanes. Here’s a round-up of the latest reports.
North American freight shipments and expenditures continued to buck broader trends and increased again in May, according to the latest Cass Freight Index Report. Indeed, the first five months of 2014 were the strongest since the end of the great recession.
“While this seems counter to the dismal GDP reading for the first quarter, which shows a one percent drop or a contraction in the economy, much of the decrease in GDP can be attributed to declining inventories, slowing exports and weather related issues,” explains Rosalyn Wilson, a supply chain expert and senior business analyst with Delcan Corp. “Many other economic signs, especially growth in the manufacturing sector, point to an uptick in the five-year recovery and a continued increase in freight movements.”
May shipment volumes rose 1 percent to the highest level since October 2011, the fourth month in a row that the number of shipments increased. May shipments were 3.6 percent higher than a year ago and 26.4 percent higher than shipment levels at the end of the 2009 recession.
“Capacity problems are being experienced in both the trucking and the rail industries as volumes grow,” Wilson says. “The impact of productivity – reducing truck regulations – has exacerbated the driver shortage, further limiting capacity despite the strong growth in the size of the truck fleet in 2014.”
Freight expenditures climbed up 1.1 percent in May, setting another record high. Spending was 11.2 percent higher than a year ago and 77.7 percent higher than at the recession’s end in 2009.
“While freight rates are not showing the full effect of tightening capacity – yet – it is unlikely that this situation will continue,” Wilson says. “New equipment and drivers have been added to the trucking fleet, and both are increasing costs substantially. However, freight expenditures are up 11 percent since the beginning of the year, which is lower than the 13.1 percent increase in the number of shipments. This indicates that rates are very competitive, Wilson notes.
