They are passed on and flow into the inflation scenario.
By Wolf Richter for WOLF STREET.
Before we get to the skyrocketing prices and expenses that shippers such as industrial companies or retailers now have to pay to ship their goods across the US, I would like to point out the volume of shipments.
The volume of shipments in June was strong, but lagged behind the peak year 2018, and this year was every month below the peak year 2018, according to the Cass Freight Index, which covers all modes of transport but focuses on truck traffic with truckloads (TL – Shipments that are more than half the dollar amounts, followed by rail, and third by shipments of less than truckloads (LTL), followed by parcel services and others, but does not include bulk.
The Cass Freight Index for shipments in June (red line) increased by 4.2% compared to June 2019 (gray line), but decreased by 1.3% compared to June 2018 (black line). Some demand could ease as the impact of stimulus spending wears off after the historic surge in retail sales earlier this year. But there are also numerous indications that the transportation industry is trying to meet shippers’ demands in light of widespread complaints about longer delivery times and bottlenecks in equipment and drivers.
There has been a tremendous need for transportation driven by stimulus-fueled consumer spending on goods, and transportation capacity is tight. And freight rates have increased, especially in truck traffic.
According to the Cass Freight Index for Expenditures, the total amount these shippers spent shipping goods to their customers in the US in June – despite the less-than-record volume – increased 11% from May, 56% from June 2020 and 28% % from June 2019:
Freight rates embedded in the components of the Cass indices increased 11% in June versus May and 23% year-over-year.
Trucking loads as prices go up.
The average national spot price for van trailers has increased over the past 12 months, reaching $ 2.67 per mile in June, up 47% year over year, according to DAT Freight & Analysis. The average national van contract rate increased 36% year over year to $ 2.73 per mile.
The average national spot price for flatbed trucks (used to transport heavy equipment, building materials, and the like) rose 52% year over year to $ 3.15 per mile. The contract rate increased 29% year over year to $ 3.12 per mile.
Diesel prices are rising.
At the end of June, the average diesel price at the pump reached $ 3.33, an increase of 37% over the previous year, but remained well below the range of $ 4 in the years 2012 to 2014:
Transport costs are passed on and flow into the general inflation scenario. The scenario here is parallelized by the ocean freight industry. For example, the average spot rates from Shanghai to Los Angeles have risen from around $ 1,500 per 40-foot container in early 2020 to nearly $ 10,000 now as container freight rates soar to new extremes, with worse yet to come
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