After leveling off in April, pricing in the trucking industry rose again in May, with local trucking prices posting their largest month-over-month gain in the post-recession era with a 1.7% increase, according to May Produce Price Index (PPI) data released this morning by the Labor Department.
Local trucking is now up 5.2% year-over-year and long-distance truckload pricing is up 7.7% year-over-year after a 0.8% month-over-month increase. The year-over-year growth is now at its highest rate since April 2011, explained Ibrahiim Bayaan, FreightWaves’ chief economist. Long-distance LTL pricing climbed just 0.2% month-over-month and year-over-year growth slipped to 7.5%, Bayaan said.
“There continues to be a spillover into intermodal freight also. Intermodal prices jumped another 2% in May and are now 14% higher than last year. It’s a pretty decent sign that shippers are pushing some of their freight to intermodal, causing price increases there,” Bayaan explained.
Overall, the PPI posted a 0.5% month-over-month increase (3.1% year-over-year), beating expectations of a 0.3% gain, due in large part to rising oil prices. The year-over-year gain is the largest since January 2012, but in spite of this, underlying producer inflation remains moderate, the Labor Department said.
The PPI measures the selling price that producers receive for what they sell and differs from the Consumer Price Index that measures only what households pay for goods and services.
The faster pace of the PPI gains only reinforces a likely increase in the interest rates, which the Fed is expected to announce later this afternoon. It also continues to suggest that the cost to move goods for shippers will remain high.
“All of these year-over-year growth rates are strong by historical standards,” Bayaan said. “Rising fuel prices probably played a big role in some of the price gains for freight this month, but overall it seems clear that high transportation costs are going to continue to be an issue for shippers going forward.”
Producer prices increased 2.6% from a year ago.
According to DAT, van rates last week climbed 10 cents per mile on the spot market to $2.29 per mile. The average refrigerated rate jumped 14 cents to $2.69 and flatbed rates hit a record at $2.81 per mile, up another 6 cents. DAT attributed the increase to the pressure from CVSA’s Roadcheck enforcement blitz.
