Pricing for Trucking Stabilizes

According to Donald Broughton with Broughton Capital, pricing for trucking appears to be stabilizing.

After being negative for 13 months in a row, the Cass TL Linehaul Index has been positive for 3 months. June’s Cass Truckload Linehaul Index increased 1.5% YoY, to 123.0. June’s pricing, while promising, was essentially flat (up 0.2%) sequentially versus May, but is still slightly negative (down 0.3%) versus June of 2015.

Broughton’s pricing forecast has improved for 2017, from -1% to 2%, to 0% to 2%, as the current strength being reported in spot rates is leading him to believe contract pricing rates should keep rates in positive territory through the end of the year.

The Cass Intermodal Price Index rose 1.8% YoY to 123.3 in June following May’s 2.2% increase. This marked the ninth consecutive month of increases; however, pricing momentum has slowed.

The absolute nominal value of the index established its most recent peak in March at 135.4 (as diesel flirted with $2.60 a gallon) and has sequentially trended lower since (as diesel has fallen back toward $2.45 a gallon).

As the price of oil has recovered from the oversold lows of February 2016, and established a price more consistent with the marginal cost of production from domestic sources, Donald Broughton with Broughton Capital expects intermodal rates to show better strength in 2017 than were achieved in 2016. The current level of demand and pricing will produce a positive YOY comparison for the next 3 to 6 months.

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