Transportation Industry Updates January 2018

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

U.S. Trucking

November truck tonnage growth was strong. The incremental improvement in freight is likely driven by increased industrial freight, modest improvement in retail volumes and substitute rail freight. Truckload volumes are expected to remain strong, but growth rates could moderate, creating market volatility for capacity and price into 2018.

Dry-van spot market rates in December were $2.27 per mile on a four-week rolling average, up 21% year over year, which was likely driven by increased demand, higher fuel surcharges and less capacity. Industry contacts estimate 2018 contact rates may increase 4-6% year over year, the first year over year increases since 2015.

December flatbed rates in the spot market were $2.18 per mile on a trailing four-week basis, up 21% year over year, but fairly stable over the past 2-3 months per normal seasonal trends. Capacity is expected to remain scarce and carriers appear to be taking advantage with flatbed contract increases of 5-10% year over year.

Global Containerized Ocean Traffic

December 2017 U.S. container imports were down 1.6% year over year following a 7% growth in November. Full year 2017 imports were up 4.2% from 2016 and up 8% from 2015. December growth rates were negatively impacted by comparisons to a 11% growth in December 2016 due to Hanjin bankruptcy disruption one year ago. Volume growth trends will continue into 2018 due to improved global economics.

Ocean spot market rates, according to the Shanghai Containerized Freight Index, from Asia to the U.S. West Coast averaged $1,100 in December, down 20% year over year. Rates fell versus 2-3 months prior as space remained available as retail inventory had surged in the early fourth quarter. Rates did see an uptick on Jan. 1 to $1,500 due to Global Reporting Initiative activity.

The Containership Lease Rate Index remains above multi-year averages through December after rising significantly in early 2017. The higher levels in 2017 are a result of increased charter demand during the alliance restructuring and Hanjin’s bankruptcy in September 2016. As a result, only 2% of the fleet is idled versus 6-8% during 2012-2016.

Rail Trends

CSX were down 0.7% year over year in the fourth quarter while Norfolk Southern saw volume growth of 5.2% year over year. Norfolk Southern is gaining market share from CSX due to recent strategic/service changes at CSX. Intermodal and coal volumes outperformed averages, while automotive and agriculture volumes underperformed.

Union Pacific reported that fourth-quarter rail volumes were up 1.4% year over year and BNSF reported that volumes were up 3.8% with the difference in growth rates seemingly a result of differing intermodal volume growth rate. Both rails benefited from increased chemical and sand volumes, likely a result of increased crude and chemical production, while coal and grain volumes underperformed.

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