Freight Costs On The Rise

Freight costs in North America are on the rise according to the latest figures from the Cass Freight Index, which show an increase of 1.8% since November. This is in contrast to freight volume which showed no change over the same time frame.

This follows the yearly trend that shows freight costs up by almost 19% while freight volumes increased by not even 1% according to Cass. The 4th quarter of 2011 also saw freight volumes off by 12% as compared to the previous 3 months.

Despite the increase in revenue, trucking companies with truck driving jobs open are feeling the pinch of increased costs for fuel and labor along with new government regulations. According to Rosalyn Wilson, a supply chain analyst for Cass, “..orders for class eight trucks are healthy…”

Freight costs rose on all markets in December, with trucking and railroad rates climbing all year. This caused the financials to do extremely well last year. Rates are expected to increase in 2012 for trucking companies in most of their markets, although capacity will continue to remain steady.

Another area that has seen steady growth rates is intermodal movement or the combination of truck and railroad to deliver freight. This is mainly due to issues with driver shortages or capacity problems in the trucking industry.

December showed a halt to the downward trend of freight volume, with a figure approximately the same as the previous month. This was good news for deliverers who saw the volume steadily decline over the last half of 2011.

Rail car traffic actually declined 7.8% between the last part of November and the 3rd week of December as compared to yearly figures. Intermodal shipments declined by almost 11% over the same time frame.
As shipments of goods dropped further, inventories piled up. The latter actually increased each month in 2011 and are now greater than those at the recession’s peak.

Wilson also reported that most transport companies are healthier as compared to one year ago, but haven’t made investments in themselves to meet expected demand in the future. She said 2012 is being forecast as another year of slow growth by the GDP, which means trucking firms could fill these truck driving jobs before the demand increases to the levels of pre-recession times. This may cause some shippers to rethink how to move their inventory.

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