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Transportation Industry Updates January 2019

Every month we take a look at the most recent transportation trends to help plan for the future. Discover industry updates for January 2019.

U.S. Trucking
The American Trucking Association’s seasonally adjusted Truck Tonnage Index increased 7.6% year over year in November, moderating from October’s revised 8.1% growth. The ATA highlighted the benefit from increased ocean import shipments due to pull-forward activity. November’s growth rate was the 19th consecutive month of growth. As a three-month moving average, November tonnage was up 6.5%.

Spot market dry-van truckload rates in December were down 8% year over year as the market experienced significant year-ago rate increases. Contract rates from 2018 likely increased 8-11%, the first significant increases since 2015. It’s predicted that truckload contract rates could be up 3-5% next year, while spot market rates could trend lower.

Global Airfreight, Containerized Ocean Traffic
Total U.S. and Canadian container imports rose 24% in December. Full-year 2018 imports rose 8%. Growth was a result of organic growth plus tariff-related inventory pull forward. With trade tariffs pending, a deceleration in ocean volumes is expected in 2019.

During December, spot market rates on trans-Pacific (Hong Kong to the U.S. West Coast) lanes averaged $2,100. Rates declined from November’s peak but remained up 30-50%. Key drivers were capacity reductions in mid 2018 and strong volume. 2018 contract rates of $1,000 and $1,200 are being honored for contracted volumes, but freight volume above allocation is being priced on the spot market. Spot market rates are expected to decline from current levels but remain higher as carriers struggle to operate profitably.

Airfreight rates in October rose versus year-ago and month-ago periods. Airfreight rates are expected to remain higher through 2018 as more capacity has been proactively locked into contract agreements due to capacity constraints with incremental pricing increases likely due to tariff-related demand at the end of 2018.

Rail Trends
During the fourth quarter of 2018, railroad volume growth slowed from the third quarter trend. CSX volumes rose 3% due to slowing coal volumes, offsetting solid automotive and intermodal volume growth. Norfolk Southern volumes also slowed to 3% in the fourth quarter from the third quarter’s 5% pace, but are instead a result of declining automotive and grain shipments year over year, offsetting solid intermodal volumes.

Union Pacific and BNSF volume growth rates slowed in the fourth quarter from the third quarter trend. Union Pacific’s growth rate slowed from 6% in the third quarter to 3% in the fourth quarter due to less frac sand and automotive shipments. BNSF’s growth rate moderated slightly from 4% in the third quarter to 3% in the fourth quarter, with slowing grain and less frac sand offsetting higher coal shipments.

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