Trucking backs off the gas slightly, but capacity is at the line
- A slight decrease in volume activity and uptick in expenditures, as seen in various trucking indices, could begin to bear out the capacity crunch afflicting U.S. supply chains.
- Trucking shipments decreased 0.16% MoM in July, still up 10.57% YoY, while expenditures increased 0.24% MoM and 17.96% YoY, according to the Cass Freight Index. The American Trucking Association (ATA) tonnage index dropped just 0.4% in June after rising in both April and May.
- "Going forward, rate trends are likely to follow a normal seasonal pattern, but at a level that’s 25 to 30 percent higher than in 2017," DAT pricing analyst Mark Montague said in an August statement.
With the pace of overall shipments and tonnage shifting down slightly at the height of summer, indicators suggest that U.S. shippers are using every inch of trucking capacity available.
"FTR estimates that active truck utilization is still at 100% where it has been all year," Avery Vise, vice president for trucking at FTR Transportation Intelligence told Supply Chain Dive in an email.
With several rounds of tariffs hitting over the summer, retailers have been rushing to bring imports into the U.S. to preserve their fourth-quarter sales. Going into the summer, analysts and stakeholders expected rate hikes as a growing economy stresses limited capacity.
Indeed, shipments spiked to the highest level since June 2007 in May 2018, reaching a rate 11.9% higher than the same period last year. At the same time, trucking expenditures have been climbing essentially throughout 2018, with the only slight down-tick in February.
But analysts are apparently divided as to whether the indicators suggest that shippers have maxed out trucking capacity, causing the summer dip in shipments, or maybe it's just the usual seasonal trends.
"There are two very vocal camps on whether we're seeing the second derivative slowdown," Kristine Kubacki, executive director of Americas research at Mizuho Securities USA told Supply Chain Dive. "I tend to be in the camp that things have just slowed down."
Vise said that July is usually weaker than June and that the second quarter is often the peak of the year, despite the coming holiday season.
"However, in the spot market, July and August has seen some stabilizing in the imbalance between loads and trucks and some modest softening in rates. So there are no signs that tight capacity is keeping a lid on freight volumes," Vise added.
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