Transportation Industry Updates December 2017

Every month we take a look at the most recent transportation industry trends to help plan for the future. Take a look at the industry trends for December 2017.

U.S. Trucking

The American Trucking Associations’ seasonally adjusted Truck Tonnage Index increased 9.9% year over year in October following a downwardly revised 6.3% year-over-year growth in September. The Truck Tonnage Index measures the total weight of freight transported by motor carriers for a given month. The index serves as a way to measure shipping activity in the U.S., and can help determine the state of the economy.

Dry-van spot market rates through late November were $2.24 per mile on a four-week rolling average, which is up 20.8% year over year. The higher year-over-year rates are likely caused by an increased volume, higher fuel surcharges and less capacity. Industry contacts estimate 2018 contact rates may increase 4-6% year over year, as a tight capacity environment post-hurricane activity persists and likely grants carriers additional pricing leverage.

Through late November, flatbed rates were $2.17 per mile on a four-week basis, up 24% year over year. The improvement is likely driven by strong industrial demand, higher fuel surcharges and hurricane-related recovery efforts in Texas and the Southeast.

Global Containerized Ocean Traffic

During November, inbound ocean volumes at all U.S. ports increased 7% year over year. Full-year volumes to date are up 4.7% year over year, and up 8% compared to 2015. Industry participants anticipate slower ocean freight growth trends after peak season in the fourth quarter, and limited pricing leverage heading into 2018.

Eastbound trans-Pacific ocean container spot rates between Hong Kong and the U.S. West Coast trended lower year over year in November. Rates during the last week of November closed at $1,371 per 40-foot equivalent. One FEU equals about 25 metric tons or 72 cubic meters. We expect 2017 spot rates to remain on the low end of the historical average ranges.

The Containership Lease Rate Index reached near peak levels in September 2017 after spiking in late April 2017. The first uptick was likely due to changes in the new alliance structure, which went into effect April 1, 2017. This forced carriers to charter vessels to help fill gaps as their networks took shape. The most recent surge has tailed off due to peak season volumes slowing post holiday season in the U.S.

Rail Trends

CSX reported the fourth-quarter rail volumes were up 4.9% year over year. Our work points to a continuation of shippers choosing to use Norfolk Southern vs. CSX as service issues persist. The Eastern rail carriers saw improved coal, intermodal, and frac sand volumes offset by declining ag freight volumes.

Union Pacific reported the fourth-quarter rail volumes were up 0.7% year over year and BNSF reported that volumes were up 2.5% year over year. Declining coal volumes were offset by continued strength in frac sand and chemicals products compared to prior year. Union Pacific saw auto volumes decline 5.6% through late November, while BNSF posted a 6.4% year-over-year improvement in auto freight.

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