Market Overview

Cass Freight Index Continues Record Climb, While Spot Market Rates Hold Steady

Cass Freight Index Continues Record Climb, While Spot Market Rates Hold Steady

The Cass Truckload Linehaul Index reached another record high in October while the company's Intermodal Price Index points to rising intermodal costs.

October's Cass Truckload Linehaul Index rose 8.2 percent year-over-year in October to 143.4. "We expect more nominal record highs in the coming months, with slightly lower percentage increases as comparisons grow increasingly tough through February," said Donald Broughton, analyst and commentator for the Cass indexes.

The Cass Truckload Linehaul Index is an indicator of per-mile truckload pricing by isolating the linehaul component of full truckload costs.

Broughton noted that the realized contract pricing forecast for 2018 has been between 6 percent and 12 percent and is complete. "We believe that this is the strongest normalized percentage level of truckload pricing achieved since deregulation," he said.

On the intermodal side, Cass reported a 10.9 percent year-over-year increase in intermodal pricing in October. The Intermodal Price Index is now at an all-time high of 147.3, surpassing the previous high of 143.2 set in March of this year.

October was the 25th consecutive month of increases.

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"Tight truckload capacity and higher diesel prices continue to create incremental demand and pricing power for domestic intermodal," said Broughton. "Although it had been higher until recently, we continue to foresee oil trading in the $45 to $65 range and diesel in the $2.50 to $3.25 range."

FreightWaves' market analyst Zach Strickland reported last week on the changes happening in the freight markets, noting that volatility has returned to the market.

"Volatility is a sign of an uncertain market," he wrote in his latest market analysis. "The buyers (shippers) and sellers (carriers) in the freight marketplace are in a constant state of cat and mouse as they rely on previous years' information to predict when the market will turn. The past 18 months have been anything but predictable, and shippers and carriers are struggling to discern how much capacity and volume are in the market."

Strickland, using SONAR data, said that volume dropped significantly in early October but started to recover midway through the month, finishing October off just 3 percent from March 1 volumes.

DAT said that spot market freight availability hit a yearly-low in October, dropping 7 percent month-over-month, and 33 percent from October 2017. DAT attributed the drop to severe weather in Asia and severe weather along the U.S. East Coast.

"We expected a seasonal rebound in October but it was interrupted by Hurricanes Florence and Michael in the Southeastern U.S., as well as Typhoon Mangkhut in Hong Kong," said DAT market analyst Peggy Dorf. "Some of that demand for truckload capacity has shifted into early November, with imported goods moving from sea ports to regional distribution centers across the country."

Rates, though, are holding steady. Van rates for the week ending November 10 remained at $2.09 per mile. Flatbed rates saw a slight dip to $2.43 per mile, a 2-cent drop from the week before, but reefer rates are climbing, likely due to food movement to stores ahead of Thanksgiving, DAT said. Reefer rates climbed 4 cents to $2.45 per mile while the reefer load-to-truck ratio jumped 4 percent.

Loads for the week climbed 1.1 percent from the week before, but so did capacity, which was up 4.4 percent. The van load-to-truck ratio fell 9 percent while the flatbed load-to-truck ratio was up 2.2 percent for the week.

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