Truckload, intermodal rates remain in check annually in August, says Cass and Avondale

The August edition of the Truckload and Intermodal Cost Indexes from Cass Information Systems and Avondale Partners pointed to similar rate activity in August compared to the same period a year ago.

This pricing data is part of the Cass Truckload Linehaul Index and the Cass Intermodal Linehaul Index, which were both created in late 2011. The indices are based on actual freight invoices paid on behalf of Cass clients, which accounts for more than $20 billion annually and uses 2005 as its base month.

Cass and Avondale said the truckload 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.

August truckload rates were up 1.0 percent compared to August 2011, according to the Cass Truckload Linehaul Index. This dipped from annual growth rates of 2.2 percent and 3.9 percent in July and June, respectively.

Avondale analyst Donald Broughton wrote in a research note that the moderation in recent months “can at least be partially attributed to share shift toward intermodal which again saw continued solid demand in August…but muted pricing power.”

What’s more, while capacity remains constrained due to things like CSA, HOS, EOBR, tight financing, higher equipment costs, and strategic acquisitions, among other things, according to the report, coupled with the fact that not enough trucking companies are failing to support stronger pricing growth, even with demand soft.

Heading into 2012, Broughton wrote that he expected it would be a strong year for freight as various economic indicators were promising, but since that time things have become worse, with the global economy weakening and myriad signs of economic uncertainty in the U.S. in the form of tax and regulatory uncertainty. Because of these factors, Avondale expects truckload pricing to increase 3-to-5 percent overall this year.

In a previous research note when the Truckload Line haul Index was first introduced in November 2011, Broughton explained 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 Atta’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 Line haul (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 $20 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.”

For intermodal, the report said intermodal linehaul rates increased 1.3 percent from July to August and were flat annually. This comes on the heels of three months of declining intermodal base rates, according to Cass and Avondale.

But with diesel prices up for the last 10 weeks and more than $4 per gallon for the last four weeks, the report indicated that this may be what is driving the uptick in recent rate increases.

Intermodal in 2012 continues to outperform other modes of freight transportation, too, with the Association of American Railroads recently stating that 2012 may be the best volume year on record.