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Transportation Industry Updates August 2018

Every month we take a look at the most recent transportation industry trends to help plan for the future. Discover the trends and updates for August 2018.

U.S. Trucking

The American Trucking Association reported that truckload volumes increased 8% year over year in June as a single-month and three-month rolling average, which is the 14th consecutive month of year-over-year growth. Quarter two volumes were up 8.4% year-over-year, and year-to-date tonnage is up 7.9% over the same period last year, doubling 2017’s 3.8% growth rate.

Truckload spot rates remained significantly higher year over year in July as average dry-spot market rates were $2.34 per mile on a four-week rolling average, up 19%. Industry-wide, 2018 contract rates are expected to increase 8-11%, the first significant year-over-year increases since 2015. Flatbed truckload pricing is seeing the strongest increases within the truckload sector, with average spot market rates of $2.72 per mile in July, up 21%, and significantly higher versus the estimated $2.20 average during quarter three and quarter four of 2017. Flatbed contract rates for 2018 are expected to increase 10% year over year./

Global Airfreight, Containerized Ocean Traffic

Total U.S. container imports were up 10.4% year over year in July. Year-to-date imports were up 6.5%. July was stronger than expected, likely due to tariff-related actions by shippers. Volumes will likely grow 3-5% in 2018. This is slightly slower than prior years, primarily due to tougher comparisons and higher industry positions. With trade tariffs pending, there is risk for additional pull-forward of shipments, which could lead to deceleration in the fourth quarter of 2018.

During July, spot market ocean rates to Hong Kong to the U.S. West Coast rose above prior year levels after about 10 months of year-over-year declines due to service cuts and various surcharges. Rates as of the first week of August were above $2,000 for the first time since 2017, and up 25%. Spot market rates are expected to remain high for the next 4-6 weeks, but begin to fall in early quarter four as the spot market rate increases are being driven by short-term events while the long-term market oversupply dynamic has not changed. As a result, 2018 contract rates of $1,000 and $1,200 continue to secure capacity.

Similar to other trade lanes, spot market ocean rates to the U.S. East Coast from Asia rose significantly in July. Average rates were $2,700, up 10% from May and up 25% from late June, and finished above $3,000. A recent increase in spot market rates due to Global Reporting Initiative activity and other surcharges is likely going to create short-term volatility, but rates are expected to trend closer to $2,000-$2,200 level in quarter four as contract rates appear to be intact at about $2,100.

Rail Trends

During the third quarter of 2018, CSX volumes have accelerated 4.0% year over year with key growth in coal and intermodal segments. Norfolk Southern’s volume growth continues to trend above CSX, with volumes up 7.4% due to better intermodal and chemical growth, plus retained market share gains over the past year.

In the third quarter of 2018, Union Pacific’s volumes rose 4.3% year over year while BNSF volumes rose 5.3%. BNSF is outperforming due to better coal and grain shipments. Notably, Union Pacific’s quarter-to-date sand volumes have declined, likely due to local frac sand mines becoming operational.

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