Trucking Operating Costs Report Highest Jump Since 2008

September 27, 2012 - As we continue to hear of looming equipment and driver shortages in the coming months, a recently released report by the non-profit American Transportation Research Institute shows that truck operating costs rose 9.3% to more than $1.70 per mile in 2011.  Reasons cited for the increased costs were fuel and oil, driver wages and new engine [EPA] costs.

Tightening capacity and increasing operating costs are catalysts for upward pressure on rates across the board for truckload, LTL and specialized carriers.  Experienced third-parties have navigated these difficult roads many times in the past couple of decades and proven to be force equalizers to help their clients control the rate of cost increases and ensuring available capacity. Smart shippers are fortifying relationships with 3PL’s in the event of further strained capacity. 

The third party logistics industry continues to grow at more than 4 percentage points than the gross domestic product and Kingsgate Transportation has been helping our clients manage these turbulent times since 1986.

To download a copy of the ATRI report, sign-up for the report at www.atri-online.org

Cass Freight Index Report August 2012

August 2012. North American freight volumes and expenditures both declined 1.1 percent in August from July levels.

August Shipment Volumes
North American freight volumes continued to drop off, and at a faster pace than last month’s 7 percent decline. On a year over year basis, shipment volumes were down 1.1 percent from last August. This is the third time this year freight shipments have fallen below the level for the same month in 2011. Freight volumes grew 9.9 percent during the first half of the year, but after two months of consecutive contraction, the annual growth has fallen to 8.0 percent.

Weak conditions in both the U.S. and global economies have led to the continued decline in freight shipments. Inventories are building beyond the levels needed to support expected sales and many retailers and manufacturers have pulled back on restocking.

The Consumer Reports Index measuring consumer financial health showed that back to school sales have not met retailers’ expectations. Their Index fell from 9.9 to 9.4 in August and is well below last year’s 12.0 percent. In addition, retailers are reporting more and deeper discounting in an effort to move goods off the shelves. All of this points to a continued drop in freight volume for the remainder of the year.

August Freight Expenditures
Freight expenditures fell for the fourth month in a row, dropping 1.1 percent in August. Compared to August 2011, freight spending is up 3.8 percent; however, the cumulative rise in 2012 is 4.4 percent (against volume increases of 8.0 percent). For the most part, rates were largely unchanged in August. Truck capacity is getting very tight in some regions of the country due to both a lack of equipment and an even more severe driver shortage. Driver pay has been increasing faster than rates, indicating that the increased cost has not yet been passed through. Expect rates to hold firm at current levels or even increase as capacity continues to tighten and carriers face higher costs for labor and fuel.