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Truckload, Intermodal Rates Drop Again

Truckload linehaul freight rates have fallen again and are barely higher than a year ago, while rates for intermodal shipments have dropped for the 14th straight month, according to the latest Cass indexes.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
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March 17, 2016
Truckload, Intermodal Rates Drop Again

 

2 min to read


Truckload linehaul freight rates have fallen again and are barely higher than a year ago, while rates for intermodal shipments have dropped for the 14th straight month, according to two new reports.

The 1.2% decline in the Cass Truckload Linehaul Index in February from the month before follows a 1.6% drop in January, placing the measure at 124.3, its lowest level since last June. Despite the drop, the index is up 0.5% in February from the year before, following a comparably modest rise of 0.4% in January.

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Investment firm Avondale Partners, which provides analysis of the index, has adjusted its pricing forecast downward to a range between -1% and 2% for the remainder of 2016, saying demand continues to soften while truckload capacity continues increasing.

Avondale also reiterated that contract pricing, which represents more than 95% of publicly held carriers’ business, has experienced increases due to a drawn-out bid season last year. However, spot market pricing, which has historically led contract pricing, has fallen well into negative territory.

This decline in spot market rates is evidenced by DAT Solutions North America Freight Index falling again in February, hitting its lowest level in years.

Intermodal Faces Shorter-Haul Fall-Off

Meantime, a gauge of intermodal rates shows it dropped another 3.8% year-over-year in February. This put the Cass Intermodal Price Index at 124.8 for the month, also down 3.8% from this past January and is at its lowest level since last June.

Avondale Partners reiterated that intermodal rates are expected to continue declining for the remainder of 2016 “as the dramatic drop in diesel prices … takes its toll on U.S. domestic demand.”

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Although analysts at Avondale predict domestic container growth in the single digits in 2016, they “believe that is dependent upon demand in longer lengths of haul growing fast enough to offset the loss of volume in shorter lengths of haul, particularly in the East.”

The Cass Intermodal Price Index is an indicator of market fluctuations in per-mile U.S. domestic intermodal costs that includes all costs associated with the move, such as linehaul, fuel and accessorials.

The Cass Truckload Linehaul Index is a measure of market fluctuations in per-mile truckload pricing that isolates the linehaul component of full truckload costs from other components, such as fuel and accessorials, providing a look at trends in baseline truckload prices.

Data within both is derived from actual freight invoices paid by freight payment processor Cass Information Systems for its clients, which totaled over $26 billion in 2014.

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