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Home » Cass report: Truck rates stayed flat through March
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Cass report: Truck rates stayed flat through March

April 10, 2012
Mark B. Solomon
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Hold the hand-wringing over rising motor freight rates, at least for now.

A monthly index of freight trends published Monday by Cass Information Systems found that shipment expenditures in March rose a scant 1 percent over February levels. Shipments expanded 2.1 percent over February, a relatively sluggish month-over-month increase and a decline of 1.3 percent from March 2011, the Brighton, Mo.-based auditing and payment firm said.

Shipment expenditures in March rose 4.3 percent from March 2011. However, the March data represented a leveling off of year-over-year increases when compared with the January and February readings, Cass said.

For the second consecutive month, the sequential growth in shipments exceeded that of costs, an indication that rates have remained flat into the start of the year, according to Cass. Rate growth has been dampened by the impact of moderately priced contract rates, which shippers and carriers negotiated last year at a time when prices were still relatively stable but when shippers were anticipating much higher rates to follow.

By contrast, rates on the non-contractual "spot" market rose throughout March as demand increased and truck capacity contracted, Cass said.

Roslyn Wilson, a Vienna, Va.-based analyst and author of several of the Cass reports as well as the annual "State of Logistics" report, said in a statement accompanying the latest report that freight rates, though rising (in some cases dramatically, depending on the region of the United States), are overall not increasing fast enough to recoup the higher costs of labor, equipment, and fuel.

Wilson, noting that many surveys and reports predict a sharp rise in freight rates in 2012 and beyond, said shipper demand so far this year "has not been strong enough to support rate hikes."

In an e-mail to DC Velocity, Wilson said rates will not show sustainable increases until volumes pick up the pace. "Unfortunately, volumes are expected to stay at their grudgingly upward pace," Wilson said.

Wilson, who has been skeptical during the past two years about a strong rebound in the U.S. economy and in freight volumes, said in the report that the economy is finally "showing signs of sustainable growth" in 2012. However, she remains frustrated by the pace of the recovery. "We are getting just enough growth to keep us in the game," she said.

As for the outlook—albeit early—for a peak shipping season in 2012, Wilson said a robust peak will depend on retailers' ability to reduce what have become high inventory levels. The nation's inventory-to-sales ratio—which measures inventory levels to support monthly sales—has remained flat for nearly five months. This indicates that little progress has been made in reducing inventory levels, which Wilson said are at pre-recession highs.

The Cass freight index is based on an analysis of payables made by hundreds of clients across a wide range of industries. Cass processes more than $20 billion in annual freight payables on behalf of its clients.

Trucking
KEYWORDS Cass Information Systems
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Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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