A Glance Over Freight Index In July

A key month-to-month indicator of U.S. transportation exercise weakened considerably in July, reflecting the sluggishness of the U.S. financial system and signaling continued stagnation for the stability of 2011.

The index, compiled by freight cost and auditing firm Cass Information Programs Inc., found that shipments from greater than a hundred of the biggest U.S. shippers declined 3.7 % over June levels. Freight expenditures from those companies declined sequentially by 2.1 percent final month as lower volumes muted spending on transport providers, the Cass index said. The report measures roughly $17 billion in annual transport spending by these shippers.

Regardless of the decrease volumes, trucking companies are reporting having to turn down loads due to a lack of capability, in keeping with the Cass report. Load boardsthe place shippers usually go to submit masses for tenderare full as shippers, and even some carriers, have turned to posting loads that need to maneuver, the report found.

"Unfortunately, the rationale for this situation will not be a burgeoning freight market, however quite the capacity constraints, for both trucks and drivers, that the trade is experiencing," stated Rosalyn Wilson, senior analyst for Vienna, Va.-based mostly Delcan Corp. and writer of the Cass report. Wilson additionally produces the annual "State of Logistics" report ready along side the Council of Supply Chain Administration Professionals.

Wilson mentioned trucking companies are reporting an acute shortage of drivers, even though they have rigs available.

Perhaps more troubling is the decline in rail carload and intermodal visitors in July from June levels. Intermodal, specifically, has proven steady features by way of the recession and subsequent restoration, so the decline in July bears watching, Wilson said.

Despite the decline in July, freight expenditures are up 29.5 percent from 12 months-earlier levels, in response to the Cass report. The yr-on-12 months enhance is due to tightening capacity conditions that have supported spikes in spot charges, the report said.

Wilson stated rising fuel, labor, and insurance costs for carriers have offset the impact of rate will increase, the newest of which were introduced in July by a number of less-than-truckload carriers. Elevated prices have made it onerous for carriers to make headway in raising revenue margins, she said. "The tightening of capability is creating alternatives to raise charges, but it is unclear if this can be sustainable if volumes proceed to dwindle," she added.

Wilson stated the U.S. economic system is in a vicious cycle where businesses won't hire and make investments till they see clear proof of stronger shopper spending, while shoppers won't spend while unemployment remains elevated and job prospects are cloudy. The latest congressional fight over elevating the nation's debt ceiling did nothing to instill confidence in consumers, whereas the agreement itself shouldn't be a optimistic for the economy as a result of it failed to realize the needed spending reductions, she said.