Commentary on the Current State of Intermodal & Truckload Spot Rates
The InTek intermodal spot rate index increased 0.4% over prior week.
For the week of October 22, 2018, domestic intermodal spot rate index:
- Increased 0.4% from prior week
- Increased 11.7% from 90 days ago.
- Increased 33.0% from prior year.
Lane Stats: 18.4% increased, 7.9% decreased and 73.7% went unchanged.
The increases were primarily driven by the outbound Chicago lanes. Atlanta outbound lanes were the primary driver of the decreases this week. The decreases in Atlanta are a result of Hurricane Michael causing freight moves to stall in the Southeast for the past couple of weeks.
Now here is where the commentary starts on the comparison of truckload to intermodal spot rates under current market conditions ...
DAT reported the national truckload spot rate of $2.11 a mile, which is a decrease of $0.02 or 0.9% lower from the prior week. Truckload spot rates are up 9.1% from prior year. The national truckload spot rate, as reported by DAT, started its decline during the summer months and has yet to show any strengthening that would indicate the decline is near an end. The continued decrease has pushed the year-over-year comparison on the truckload spot rate percentage down to 9.1%. In comparison, the domestic intermodal spot mileage rate has continued its climb and is now running over $2.00 a mile and is 25.4% higher on a year-over-year comparison.
Earlier in the year, both truckload and intermodal spot rates were running at a similar year-over-year increase and the expectation we have maintained since mid-July is the truckload and intermodal spot rates would again have similar year-over-year comparisons, with intermodal holding a 5 to 10 point differential over truckload because it has lagged truckload on pushing spot rate prices. The current 16.3 point spread is a bit of a concern, particularly when considering history has shown favorable conditions of truckload to intermodal conversions have been more prevalent when truckload spot rates are $2.10 a mile or greater. The $2.10 mark has always been at a time when intermodal spot rates were much lower in comparison, so the rates is probably closer to greater than $2.25 a mile. In other words, the current price spread would indicate intermodal is at or past the tipping point where it could potentially be positioning itself in giving market share back to truckload.
We will continue to monitor market conditions, but have to wonder if today's CSX announcement of dropping its peak season per diem scale a full month prior to plan because it wants to align policy with market conditions is the first step in acknowledging intermodal rates may be ahead of itself.
Diesel Fuel Comments:
The EIA reported average diesel fuel price of $3.380 per gallon this week, which is a $0.014 decrease over prior week.
The diesel price per gallon is up $0.583 or 20.8% higher from the same period last year.
Oil prices continue to push lower this with WTI and Brent trading in the range of $66.25 and $76.50, respectively.
The EIA trimmed its forecast last week for world oil demand as it is less optimistic on demand because of slowing world economies, trade & tariff concerns and rising interest rates.
The EIA's most current diesel price projection for diesel is $3.15 a gallon for calendar year 2018.
The full spreadsheet of the historical weekly price moves of diesel full can be found at https://www.eia.gov/petroleum/gasdiesel/.
Graphs listed below include:
- 53' Domestic Intermodal Price Index & Diesel Fuel Prices
- Variance to January 1, 2013 Baseline
- Rolling 52 Year-over-Year Comparison - 53' Domestic Intermodal and Diesel Fuel Prices
- Rolling 52 Year-over-Year % Change - 53' Domestic Intermodal and Diesel Fuel Prices
- 53' Domestic Intermodal and Diesel Prices Quarter-Over-Quarter Comparison
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