Intermodal Spot Rates Increase Slightly - Sept 25 2018
The intermodal spot rate index increased 1.6% over prior week. Of the 115 lanes tracked in the weighted average index, 19.3% increased, 13.2% decreased and 67.5% went unchanged.
For the week of September 25, 2018, domestic intermodal spot rates were:
- Increased 1.6% from prior week
- Increased 10.4% from 90 days ago.
- Increased 39.0% from prior year.
Spot rate increases came primarily from outbound SoCal and Seattle, while decreases came primarily from Atlanta.
While many were predicting national truckload spot rates would spike up after hurricane Florence, the national dry van spot rate, reported by DAT, a national average of $2.15 a mile. This is a 0.5% decrease from the prior week and 20% higher over prior year.
Two stories need to be watched over the month of October, as it relates to freight rates and intermodal:
- oil prices may be the catalyst that drives freight rates up another step
- intermodal spot rates may be ahead of itself, as compared to truckload spot rates
As of late, intermodal spot rates have outpaced truckload spot rates, but we would argue it should have to a point. The issue now is intermodal spot rates have remained elevated on an indexed total and per mile basis, while truckload spot market rates have backed off their June 2018 highs. In prior periods, the national truckload mileage price average of $2.10 has been a benchmark where our office has historically had more activity with shippers looking to modal conversion for capacity and price reasons, but that was when intermodal spot rates were at lower levels. October is shaping up to be the period where the market will speak the loudest and we will continue to monitor.
Diesel Fuel Comments:
The EIA reported average diesel fuel price of $3.271 per gallon this week, which is a $0.003 increase.
The diesel price per gallon is up $0.483 or 17.3% higher from the same period last year.
Oil prices continue their climb with WTI and Brent trading in the range of $72.15 and $81.85, respectively.
Analysts are starting to listen and believe the warnings coming out of OPEC indicating the cartel does not have the capacity to fill the Iranian shortfall that is being driven by USA sanctions. This shortcoming will hit the freight market in two ways:
- Oil is projections are increasing to greater than $80 for WTI and over $100 for Brent, which will push diesel fuel above current projections.
- The US oil market will push production up to take advantage of market oil prices, which will impact the -supply-demand balance truck and rail capacity. The reason being is the US fracking strategy for oil production drive up truck demand because of all the material required in the process. In addition, the Permian Basin strains truck capacity because there is not enough pipe in the area to get the oil to market driving higher truck demand.
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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