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Transportation Industry Updates November 2017

Every month we report on the most recent transportation industry trends to help plan for the future. Take a look at these industry updates for November 2017.

U.S. Trucking

The American Trucking Associations’ seasonally adjusted Truck Tonnage Index increased 7.4% year over year in September following a downwardly revised 3.5% year-over-year gain in August. 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 October were $2.08 per mile on a four-week rolling average, which is up 19.3% year over year. The higher year-over-year rates are most likely driven by a combination of higher fuel surcharges, less capacity, natural disaster relief efforts and strong import volumes. Industry contacts estimate 2018 contract rates may increase 3-5%, which would be the first year-over-year increase in two years.

Through late October 2017, flatbed rates were $2.24 per mile on a trailing four-week basis, up 25.7% year over year. The improvement is likely driven by strong industrial demand, higher fuel surcharges and FEMA related recovery efforts in Texas and the Southeast.

Global Containerized Ocean Traffic
During October, inbound containerized ocean volumes at all U.S. ports increased 2.6% year over year. Full-year volumes to date are up 4.5% year over year, and up 7% compared to the same period in 2015. Industry participants anticipate slower ocean freight growth quarter over quarter in the fourth quarter.

Eastbound trans-Pacific ocean container spot rates between Hong Kong and the U.S. West Coast remained below 2016 levels during October. Rates during the last week of October closed at $1,671 per forty-foot equivalent unit (FEU). One FEU equals about 25 metric tons or 72 cubic meters. Spot rates for 2017 are projected to remain on the low end of historical average ranges.

The Containership Lease Rate Index reached near peak levels in September 2017 after spiking in late April 2017. The first quarter uptick was likely due to changes in the alliance structure, which went into effect April 1, 2017. This forced carriers to charter vessels to help fill gaps as networks took shape. The most recent surge has already begun to show signs of decreasing again, which is tied to slowing peak season demand as the holidays approach.

Rail Trends

CSX reported fourth-quarter rail volumes were up 1.2% year over year, while Norfolk Southern reported carloads were up 4.7% year over year. The Eastern rail carriers saw improved coal, intermodal and frac sand volumes with Norfolk Southern benefiting from share gains due to CSX service issues.

Union Pacific reported the fourth-quarter rail volumes were up 0.7% year over year and BNSF reported that volumes are up 3.8% year over year. Declining coal volumes were offset by continued strength in frac sand and chemical products compared to prior years. Union Pacific saw auto volumes decline 7% through late October, while BNSF posted a 7% year-over-year improvement in auto freight.

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