Durable goods orders rise

The U.S. Commerce Department tells us that in June, durable goods orders rose 2 percent over the previous month. In July, the increase was 2.1 percent from June.

When taking away the volatile aircraft component, orders declined 0.4 percent following two months of increases.

An underlying business-investment gauge, new orders for nondefense capital goods excluding aircraft, increased 0.4 percent in July from the prior month, marking the third straight monthly increase.  Employers are still spending despite slowing global growth and trade tensions.

Consumer Price Index rises

The Bureau of Labor Statistics reported that the U.S. Consumer Price Index (CPI) rose 0.3 percent in July. The CPI measures changes in prices for goods and services at the retail level. Raising the headline number, gasoline prices rose 2.5 percent in July following June’s drop of 3.6 percent. Compared with the same time last year, the CPI is up 1.8 percent.

The core CPI, which excludes volatile food and energy prices, increased 0.3 percent from June. Year-over-year, the core CPI remains relatively steady, rising 2.2 percent from July 2018.

Housing mixed

This morning, the Census Bureau reported that housing starts were off 4 percent in July, but housing permits gained 8.4 percent over June. Compared with the same time last year, housing starts, and housing permits increased 0.6 percent and 1.5 percent, respectively. Multi-family starts are continuing to drag. In July, multi-family starts were off 16.2 percent and 2.8 percent from June and a year earlier.

On a more positive note, sales of previously owned U.S. homes picked up in July, a sign that lower mortgage rates may be finally starting to drive sales after a weak spring selling season.

July marked the first year-over-year uptick in 17 months as existing-home sales rose 2.5 percent in July from the previous month to a seasonally adjusted annual rate of 5.42 million, the National Association of Realtors said.

Housing is a growth driver for the trucking industry as flooring, furniture, appliances, etc. all move by motor carrier.

Factory output down

Factory activity is another large driver of truck freight. The Federal Reserve reports that factory output declined 0.4 percent from June to July. It had rose 0.6 percent in June.

Compared with a year earlier, output was down 0.5 percent.

Trucking market         

The American Trucking Associations (ATA) reports that truck tonnage surged 7.3 percent in July, the largest year-over-year gain since April, compared with July 2018.

Tonnage increased 6.6 percent in July over June, according to ATA’s advanced seasonally adjusted For-Hire Truck Tonnage Index.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, equaled 122.8 in July, 4.5 percent above the June level of 117.5. ATA’s research department said that in July, the index equaled 122.7 (in calculating the index, 100 represents 2015 levels), compared with 115.1 in June.

It is important to note that ATA’s tonnage data is dominated by contract freight, which is performing significantly better than the plunge in spot market freight this year.

It seems like every other week as I put together this blog, there is news of a carrier bankruptcy. This week it is HVH transportation, a 344-unit trucking company that has abruptly shut down. It’s the latest in a string of trucking failures stemming from an economic environment that has put pressure on operating ratios.

The Denver, Colorado truckload carrier operated in all contiguous states west of the Appalachian Mountains, with the exception of the deep South. Initial reports in the wake of the abrupt shutdown indicated that the company left drivers stranded over the road, in a situation that was like the sudden closure of Falcon Transport, another private equity backed trucking company that abruptly closed earlier this year.

Higher costs for equipment, drivers and insurance in 2019 coupled with falling freight rates has created the worst year of profitability in the trucking industry in over five years. Even the downturn of 2016 was not nearly as painful in terms of operating losses.

Eight mid-size and large carriers have shut their doors in 2019 including NEMF, Falcon, and LME.

Currently, there appears to be some hope for carriers as spot pricing shows signs of reaching the bottom. DAT Solutions reports that spot truckload freight pricing held firm during the week ending August 25th despite a 3 percent drop in the number of posted loads.

The number of posted trucks increased 2.6 percent compared to the previous week and pricing was virtually unchanged week over week in a sign that spot rates have hit a seasonal low prior to Labor Day, when demand typically starts to build again.

National Average Spot Rates, Through August 25th:

  • Van: $1.81 per mile, 3 cents lower than the July average
  • Flatbed: $2.20 per mile, 7 cents lower than July
  • Reefer: $2.14 per mile, 5 cents lower than July

Railroads continue in a down market

The Association of American Railroads (AAR) reported U.S. rail traffic for the week ending August 24th, 2019.

For this week, total U.S. weekly rail traffic was down 5.9 percent compared with the same week last year.

Total carloads for the week ending August 24th were down 5.3 percent compared with the same week in 2018, while U.S. weekly intermodal volume was down 6.5 percent compared to 2018.

For the first 34 weeks of 2019, U.S. railroads reported cumulative volume of 8,603,107 carloads, down 3.4 percent from the same point last year; and 9,055,095 intermodal units, down 3.8 percent from last year. Total combined U.S. traffic for the first 34 weeks of 2019 was 17,658,202 carloads and intermodal units, a decrease of 3.6 percent compared to last year.

At Wagner Logistics

Labor Day is upon us and it’s a time for me to honor our Wagner associates who go to work every day and take care of their customers, internal as well as external. Growing up in this business I have always respected the dignity of workers. There are no little jobs.

One of Wagner’s core values is Teamwork: We collaborate and contribute, using everyone’s strengths, knowledge and talents.

I thank all of our Wagner team for their commitment and hard work. I wish everyone out there a safe, joyful Labor Day weekend.

What may Wagner Logistics do for you?

If you are considering new distribution centers or a freight RFP I hope you will give Wagner an opportunity to serve you.  We have an extensive history of 73 years of service to our customers and would love the opportunity to collaborate with you.

As we say every day, Bring it!

Have a great day,

John Wagner Jr. 

About Wagner Logistics

Wagner Logistics was founded in 1946 on the principle that every customer is a big deal and that continues to pervade our mentality, producing a superior customer experience. The company began in trucking and remains dynamic offering top-notch transportation, dedicated warehousing and robust fulfillment services. We strive to produce innovative solutions, in addition to our superior onboarding process which makes transitions seamless, and have been honored 18 years in a row by Inbound Logistics as a Top 100 3PL. Our customers drive our entry into new geographic markets, technological advances and ever-changing distribution challenges. Where do you want to be? Wagner says, Bring It!