• ITVI.USA
    15,341.400
    78.550
    0.5%
  • OTRI.USA
    24.780
    0.360
    1.5%
  • OTVI.USA
    15,289.500
    66.220
    0.4%
  • TLT.USA
    2.690
    0.010
    0.4%
  • TSTOPVRPM.ATLPHL
    2.550
    -0.030
    -1.2%
  • TSTOPVRPM.CHIATL
    3.030
    -0.080
    -2.6%
  • TSTOPVRPM.DALLAX
    1.450
    0.150
    11.5%
  • TSTOPVRPM.LAXDAL
    2.910
    -0.030
    -1%
  • TSTOPVRPM.PHLCHI
    1.700
    -0.040
    -2.3%
  • TSTOPVRPM.LAXSEA
    3.020
    -0.010
    -0.3%
  • WAIT.USA
    120.000
    0.000
    0%
  • ITVI.USA
    15,341.400
    78.550
    0.5%
  • OTRI.USA
    24.780
    0.360
    1.5%
  • OTVI.USA
    15,289.500
    66.220
    0.4%
  • TLT.USA
    2.690
    0.010
    0.4%
  • TSTOPVRPM.ATLPHL
    2.550
    -0.030
    -1.2%
  • TSTOPVRPM.CHIATL
    3.030
    -0.080
    -2.6%
  • TSTOPVRPM.DALLAX
    1.450
    0.150
    11.5%
  • TSTOPVRPM.LAXDAL
    2.910
    -0.030
    -1%
  • TSTOPVRPM.PHLCHI
    1.700
    -0.040
    -2.3%
  • TSTOPVRPM.LAXSEA
    3.020
    -0.010
    -0.3%
  • WAIT.USA
    120.000
    0.000
    0%
Economics
Trending

Trucking rates fall again

Data on producer prices shows that wholesale inflation pressure was nearly nonexistent in July. Industry detail showed broad-based declines in trucking rates, and yearly it is likely to turn negative in upcoming months.

The Bureau of Labor Statistics reported that the producer price index (PPI) rose 0.2 percent in July from June’s levels. This fell in line with consensus estimates and follows two consecutive months of 0.1 gains in May and June. Overall results during the month were helped by 0.4 percent growth in goods prices, led by a 2.3 percent rebound in energy prices. This helped offset a 0.1 percent decline in service prices for trade services, which ended a streak of five consecutive monthly gains in the sector. The core PPI, which excludes food, energy and trade services, fell 0.1 percent in July as year-over-year growth fell to a two and a half year low of 1.7 percent.

Core PPI growth continues to trend downward

Market watchers and policymakers typically use the PPI to gain some insight into what the underlying pressures of inflation are in the economy. Federal Reserve officials have cited concerns over low inflation as one of the reasons why they lowered interest rates late last month. While the PPI is not the Fed’s preferred measure of overall price levels in the economy (that honor belongs to the core personal consumption expenditure deflator), this morning’s core PPI results would suggest that inflation pressures from producer prices are virtually nonexistent in the middle of the year.

Long-distance truckload rates slide again, near negative territory

The monthly PPI release also offers a tremendous amount of detail each month, allowing for insight into pricing trends for commodity, product and industry groups. Producer prices for General Freight Trucking fell 1.2 percent from June’s levels, more than erasing the gain from last month. Year-over-year growth tumbled to 1.2 percent as a result, which is the slowest pace of yearly increase in more than two years

Long distance trucking rate growth is falling rapidly

Declines during the month were broad-based in the industry, as local, long-distance truckload and long-distance less-than-truckload (LTL) all fell in July. Long-distance truckload rates declined sharply, as rates fell 1.3 percent from June’s levels. Year-over-year growth fell to 0.3 percent as a result, which is also the slowest pace of yearly growth in over two years. LTL long distance rates fared even worse in July, falling by 1.5 percent, while local rates experienced a more modest 0.2 percent decline from June’s levels. Year-over-year growth in long-distance LTL and local rates fell to 2.5 percent for each, well below the rapid pace of growth seen in mid-2018.

Behind the Numbers

Headline PPI results have offered little in the way of excitement in recent months after some brief concerns near the end of 2018 that inflation was beginning to accelerate in the economy. Recent PPI results suggest that there is very little pressure for inflation coming from producer prices. This may change as we near the end of the year if the latest wave of tariffs on goods from China goes into effect as scheduled, but for now neither goods nor service prices have been accelerating in any meaningful way

On the trucking side, July’s PPI results resume the general trend in rates after June’s likely seasonal surge. After hitting multi-year highs in the second and third quarter of 2018, rate growth has come down quickly as demand growth slowed. FreightWaves SONAR load tender volume data (OTVI.USA) suggests that volume growth is now positive on the for-hire side of the industry, but not strong enough to absorb all of the extra capacity that was added throughout 2018. Tender rejection rates (OTRI.USA) remain well below where they were at this point last year, suggesting that carriers still do not have much in the way of pricing power in the market.

Outbound Tender Volume Index (United States of America) Trucking Rates
Tender volume is up year-over-year but low rejection rates suggest loose capacity

This trend is likely to continue in upcoming months. Concerns over global growth and recent tariffs will probably restrain any significant acceleration in growth on the demand side, and as long as capacity remains loose, downward pressure on rates will continue in the industry. Comparisons to last year are fairly tough over the next few months, and it is likely that yearly PPI growth in the industry will turn negative, especially for long-distance truckloads.

Ibrahiim Bayaan is FreightWaves’ Chief Economist. He writes regularly on all aspects of the economy and provides context with original research and analytics on freight market trends. Never miss his commentary by subscribing.

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Ibrahiim Bayaan, Chief Economist & Market Expert

Ibrahiim covers developments and trends in the global economy. His focus is on understanding the links between movements in the macroeconomy and the implications for freight markets. Ibrahiim is also a one of FreightWaves’ Market Experts. Prior to FreightWaves, Ibrahiim spent nearly a decade building up the forecasting capabilities and creating the economic messaging at UPS. Ibrahiim and his family live in Atlanta, Georgia.

25 Comments

  1. Freighrwaves is nothing but tryin to undermine the trucking industry
    With negativity!! I am a owner op out here every day and the rates are
    On there way back up,!!! My current load is 2.42 per mile.
    Nice try again freightwaves.

    1. If truck owners would not haul the $1.60 mile crap and challenge brokers instead of rolling over there would be better rates.

      1. That’s where they get, and allow them southern border NAFTA drivers to run. As a driver from mexico or canada will ALWAYS run a load at that rate and that’s not a joke but fact.

        1. That freight you speak of LEAVES the country. They are not allowed to pull freight inside the USA. If you are aware of this practice, and allow it, you’re part of the problem also.

      2. Agreeded… but when Greed and Non Experienced companies have formed and our Government steps All over the the Established Trucking Companies by Granting Tax Exemption for foreigners, the Foreigners take those low paying loads causing the industry to decline rates…The Only one or power that benefits or makes profit is the Gov.

  2. The load board suggest exactly what he stated. Freight isin the toilet and has been decreasing all year.. trying to figure out if the economy is as our president keeps stating “its booming” I doubt believe it. If people we’re buying lots of goods and services there would be less afraid but that is not what is happening. so yeah I get some loads that are $2 a mile but for the most part the loads are in the toilet and less you’re running short loads.

  3. Freight will continue to be needed, So we should focus our concerns on not moving cheap freight. Don’t be concerned with what they want you to move it for stick to your rate or let the freight sit!! I don’t haul anything under 3.4per mile

  4. There may be a driver shortage, but there’s no capacity shortage; most spot loads don’t stay posted very long. There’s far too many fools out here that refuse to park their trucks. Even with 5% of owner ops being content with beer and cigarette money, throws everything off!

  5. Not all of us are economists. A noted CEO said many years ago, ” If you’re giving a speech, and the average year-old can’t understand it, it’s time to rewrite it ” . Know your audience.

  6. This is a scandle. There are not enough trucks on the road, and there are generally..much more loads to truck ratio…the economy is booming which indicates consumer spending and thus would require even more loads needed to be moved…. therefore…the rates should be tge highest ever. Its a big scandle. The rates should be some of the most highest ever recorded, yet they claim falling rates? IT MAKES ABSOLUTELY NO SENSE AT ALL!!!!! TRUCKERS NEED TO UNITE TO GET BACK OUR INDUSTRY AND INSTILL OUR POWER, DEMAND RESPECT, AND BE PAID ACCORDINGLY!!!

    1. There are far to many fools out there that will work for pennies then let there trucks sit for the greater good. Remmeber they tried to strike many years ago and the ones that striked lost jobs an the cheap labor took the work. I just came off a company that offered me a deal to owner op. I ran the numbers over and over and over and in the end tokd them nope wont work dont know how anyone has accepted this deal with you guys. Work a month for only 2k take home and still need to find ways to pay repairs. They said many do i said they are fools.

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