Intermodal Spot Rates Telegraph Market Direction Blog Feature
Rick LaGore

By: Rick LaGore on July 31st, 2018

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Intermodal Spot Rates Telegraph Market Direction

Intermodal | diesel fuel price | truckload | intermodal spot rates

The intermodal spot rate index decreased 1.3% over prior week.  Of the 115 lanes tracked in the weighted average index, 18.4% increased, 14.0% decreased and 67.5% went unchanged.  The decreases were primarily in lanes associated with outbound Northern California.

intermodal train picintermodal trucks-1

 

 

 

 

 

For the week of July 30, 2018, domestic intermodal spot rates were:

  • Down 1.3% from prior week.
  • Up 9.0% from 90 days ago.
  • Up 42.8% from prior year.

The national dry van spot rate, reported by DAT, was $2.30 a mile this week.  This is a 1.3% decrease from the prior week and 29% higher over prior year. 

Continue to keep your eyes on the intermodal and truckload spot rates, as they give insight to the overall direction of the 53' market and hints of what is to come.  Key points from the intermodal spot rate charts include:

  • Intermodal capacity is more constrained than many have experienced in their careers, as illustrated in the all-time highs charts below.
  • The breadth of increases across all 115 volume lanes indicate all class I railroads are at peak demand levels.
  • Intermodal has three types of constraints: container, chassis and power. 
    • Currently, all three areas are constrained:
      • The ELD mandate has tightened the market and caused the dray community to run shorter miles.
      • Record demand has caused container constraints.
        • Demand is also a contributing factor to run lanes that are closer to intermodal ramps to increase container utilization through more turns.
      • Chassis capacity problems have been more prevalent as increased demand has caused dray capacity to go deeper into the chassis inventory and in the process is finding more equipment issues than in a more normal market.
  • As was covered in the blogs in 1st & 2nd quarter blogs of 2017, the 53' capacity was well balanced and showing resilience starting mid-December 2016 through mid-July 2017 indicating that there was strong demand building.  This strength was illustrated in the charts with both dollar and percentage variance holding an extremely tight range for an extended period of time.  
    • With the underlying market strength, the hurricanes of 2017 were the straws that broke the camel's back.  After the hurricanes, strong volumes quickly followed.

The takeaway from the above is the spot market telegraphs the market story.  Through the intermodal spot rate index, InTek was reporting the market strength well in advance of the record surge.  This reporting gave those in the intermodal market the opportunity to take notice of the trends and make strategic adjustments to their execution plans and budgets.  Freight is a cyclical market, so stay tuned as this tool will also telegraph when the market moves the other direction. 

Diesel Fuel Comments: 

Moving onto the fuel side of the intermodal pricing equation, the EIA reported average diesel fuel price of $3.226 per gallon this week, which is a $0.006 increase.

The diesel price per gallon is up $0.695 or 27.5% higher from the same period last year.    

Oil prices holding relatively flat to the prior week.  Oil started the week above $70 a barrel, but dropped below it today.  WTI and Brent are trading today in the range of $69.00 and $74.25, respectively.  Oil production and infrastructure companies have been reporting a ramp up in oil production capital spending to meet demand during their earning calls these past two weeks, so there does appear to be upward price pressure on the horizon.

The EIA for diesel and oil prices current projection is diesel will average $3.14 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

Intermodal Spot Rate and Diesel Fuel-3

 Baseline Analysis - Intermodal Spot Rate and Diesel Fuel-3

 Intermodal Spot Rate and Diesel Fuel Yr-over-Yr Comparison-3

Intermodal Spot Rate and Diesel Fuel Yr-over-Yr Percentage-3

Intermodal Spot Rate and Diesel Fuel Qtr-over-Qtr Comparison-3

For more on 53' domestic intermodaltruckload and managed transportation services, please sign-up for our weekly blogs and visit the InTek Freight and Logistics website.

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About Rick LaGore

Rick is the co-founder and CEO of InTek Freight & Logistics, a company focused on being the place where companies come when faced with a logistics problem.

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