OnDemand WTP Pricing Research

Pricing picture for truckload and intermodal remains positive, says Cass and Broughton Capital | Logistics Management

“Pricing for trucking is growing ever stronger and ‘gaining momentum’ continues to be an understatement,” wrote Broughton Capital Managing Director Donald Broughton in the report. “After signaling an industrial recession in the U.S. and being negative for 13 months in a row (from March 2016 through March 2017), the Cass TL linehaul index has not only been positive now for 11 months in a row, but the strength is continuing unfalteringly. We believe this is the strongest normalized percentage level of TL pricing achieved since deregulation (normalized meaning except for extreme periods of recovery from recession). The current strength being reported in spot rates by DAT Solutions is leading us to believe contract pricing rates should keep rates in positive territory well into 2018.”

On the intermodal side, the index stated that total intermodal pricing headed up 5.4% annually to 137.9 in February, with the three-month moving average up 4.8%. This follows gains if 5.0% in January, 4.0% in December, 3.9% in November, and 1.9% in October.

What’s more, it pointed out that this marks the 17th consecutive month of gains, with pricing momentum improving.

“Tight truckload capacity and higher diesel prices are creating incremental demand and pricing power for domestic intermodal,” wrote Broughton, adding that diesel prices at around $3 per gallon serve as a positive contributing factor for both demand and pricing.

As for intermodal volumes, Broughton explained that domestic container shipment volume may head up at a mid-to-high single digit pace in 2018, with the caveat that this growth depends on diesel prices staying at current levels or higher, as well as demand in longer lengths of haul growing at a clip that is able to offset the potential loss of volume in shorter lengths of haul, especially in the eastern U.S.

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Pricing picture for truckload and intermodal remains positive, says Cass and Broughton Capital – Logistics Management.

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