By Brad Hollister
Freight costs are increasingly being driven increased through sky-rocketing diesel-powered energy costs and also tightening up carrier capacity.
One of the industry’s major index of U.S. shipping activity hit levels in March that reinforced what shippers and carriers are discovering: that tightening capacity and soaring diesel fuel costs are driving up shipping expenses at a much more quickly rate than tonnage.
The transportation index, developed by freight audit and payment firm Cass Information Systems, is based on the expenditures and freight shipments of 400 shippers which use Cass’s services. The freight freight index has reported more than six percent jump from February 2011 to March of 2011 which demonstrates soaring transportation rates. Transportation fees continue to rise just about thirty-four percent from cost levels of just one year ago.
Despite the fact that the unpredictable the winter season patters produced by the month of February often affects freight tonnage, the latest transportation report released by Cass Freight Bill Auditing reveals roughly a seven percent increase in the number of freight shipments over the same period in 2010.
Several logistics professionals think that this pattern will continue throughout the year. Primary freight marketplace authorities are implying that more deeply tightening of freight capacity and increasing soaring diesel fuel fees will increase transportation rates significantly throughout the year. Many these freight marketplace professionals are predicting mounting freight transportation expenses to continue throughout the rest of 2011.
The report released from Cass’ Freight Bill Auditing Services has linked the increase in freight volumes to exhibit the economy is growing and an economic recovery is underway. Whether or not an economic recovery is underway, there are certainly challenges ahead before sharp growth can occur. On major concern for all freight marketplace experts is the sky-rocketing price of oil. The average price for a gallon of diesel fuel is up more Twenty-Five Percent (or more than One-Dollar) from this period last year. California and New York are the states reporting the highest diesel fuel, with fees nearing the $4.50 per gallon.
Leading Supply Chain Analysts at JPMorgan Chase, reported research which advised that the existing growth in shipments presently underway in the freight marketplace seemed to be considerably better than the increase throughout the last growth trend for owner operators, which occurred between 2004 and 2006. JPMorgan Chase research has been also careful to not that freight shipment growth during February of 2011 could be explained by the milder than normal winter which much of the mid-west experienced, when compared to other years.
Lots of masters view the Cass transportation freight index as a measurement of volume trends in the less-than-truckload and truckload markets. These analysts believe the shipment transportation index is rising at a more quickly pace than the industry’s daily volume figures, an indication that the firm’s first-quarter industry tonnage prediction seem to be a conservative estimation going forward.
Because of the fragmented nature of the truckload marketplace, it numerous analysts agree that connecting the Cass Index with the freight marketplace trends in truckload is much harder to perform and derive definitive trends from. Freight marketplace results are indicating recent demand for truckload freight transportation is trending in accordance with or slightly above average demand patterns of the historical truckload business cycle.
So far in 2011, the freight transportation data implies a shift of power back to the hand of the freight carriers and owner operators. As displayed by the first three months of 2011, capacity has become more difficult to come by and truckers have been able to command much higher fees for freight freight shipments and cargo deliveries. Multiple economic factors have helped trucking companies and nationwide fleets restore bargaining power, including the climbing price of diesel fuel. Federal imposed mandates and regulation have also constrained the free market operation of most fleets and truckers which have squeezed operations and increased the cost of doing business. Quite a few analysts believe this direction to continue throughout 2011, whether or not an economic recovery gains even further momentum.
About the Author:
Brad Hollister is an Experienced Freight Executive with Freight Access (Freight Access.com ). Hollister carries a appreciation for Business Development interest in latest technology. Contact him with at BradHollister.com. (Brad Hollister ).
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