Measures of both truckload and intermodal rates posted another rounds of declines, according to new figures released by freight payment processor Cass Information Systems.

The Cass Truckload Linehaul Index fell another 2.8% year-over-year in August following decreases of 1.8% and 1.6% in June and July, respectively. This represents six consecutive months of year-over year-declines in truckload linehaul costs.

The reading of 121.5 is also down 0.9% in August from July but is up slightly from June, when it hit a reading of 121.2, it lowest level so far in 2016.

Analysts at the investment firm Avondale Partners have adjusted their pricing forecasts further downward to a range between -3% and 1% over the next four quarters, saying that demand continues to soften while truckload capacity has become more available. “While we have been predicting negative pricing, even we were surprised at how weak the August data point was.”

The index is an indicator of market fluctuations in per-mile truckload pricing, isolating the linehaul component of full truckload costs from other components, such as fuel and accessorials, providing a reflection of trends in baseline truckload prices.

Meantime, the Cass Intermodal Index continued its downward slide, falling another 2% year-over-year in August after declines of 1.5% and 2.4% in June and July, respectively.

Despite the drop, the reading of 125.5 in August is up 1.6% from July’s level and marks the second straight month-over-month improvement.

Even with this, Avondale Partners still expects intermodal rates to continue their decline through the remainder of 2016 as the dramatic drop in oil prices continues to negatively impact U.S. domestic demand.

"The greater than 30 cents a mile decline in fuel surcharges collected by truckers in the last two years has to challenge demand and pricing power for domestic intermodal, especially in shorter lengths of haul,” said Avondale. “However, the current year-over-year decline in fuel surcharge per mile is now less than 4 cents.”

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

It and the truckload linehaul index are based on costs as of January 2005 and use a base value of 100. Both are derived from actual freight invoices paid on behalf of Cass’ clients, which totaled $25 billion in 2015.

 

Originally posted on Trucking Info

0 Comments