Posted Date : 2015-11-09
Freight demand sputters with easing of truckload rate growth
The rate growth that has been noticed some time back has been waning with slowing down of demand in freight and loosening of capacity, according to industry experts. This shift was experienced last week with the gross domestic product rising far slower to just 1.5%, which is lesser than that of the second quarter sale of 3.9%.
In September, the freight payment data is known to have risen to just 3.2% when compared to last year percentage of the same month, according to the truckload rate index based upon Cass Information System, which is a small increase. It was about 6.7% increase in rates way back in September 2014, over its previous year.
However, except that of an increase in fuel surcharge, the rates on a per-mile basis is said to have risen at a slower pace, when compared to this year’s second quarter and third quarter of the previous year. Truckload rates of a well-known company for instance in last year’s third quarter was 3.6% higher when compared to last year’s second quarter of 4.9% and third quarter’s 5.1%.
Across all segments, more especially on truckload pricing as well as specific less than truckload pricing, downward pressure was noticed on non-contractual pricing due to excess capacity, according to sources. The earnings in the third quarter were expected to be below 70% of the average analytical forecast and sources blamed it for the ongoing weak conditions.
Since 2014, all truckload freight types’ spot rates have been lagging when various disruptions and weather are known to have pushed to record levels the spot rates.
The weak spot market is the cause for low market and has effectively knocked down previous expectations of about 4% - 5% increase in rates, excluding that of fuel surcharges.
Again, in 2016 and for the remainder part of the year, carriers are said not to expect much with
regards to increasing in contractual rates. Sources stated that it is out of the contract rates that momentum is witnessed, after last year’s 4.7% increase.
regards to the line on the increase, shipping trailers
anticipated to put them on hold, while considering current individual market conditions and background history, as shippers would not want to hurt their business. The 2014 capacity shortage witnessed is still fresh in their
memories. Hence, for trying to have the increases to be controlled, they are to understand as to
which lanes have huge capacity and which are under pressure.