Consumers feeling better
The Conference Board’s index of sentiment increased to 91.3 from a revised 88.9 reading in January, according to a report Feb. 23. The median forecast in a Bloomberg survey of economists called for the measure to rise to 90.
The improvement in sentiment comes as Democrats in Congress race to pass a $1.9 trillion economic stimulus package, which includes additional aid checks and expanded unemployment benefits. Vaccine distributions continue to ramp up with over 40 million Americans having received at least one dose. At the same time, confidence remains well below pre-pandemic levels.
Unemployment claims fall
Initial weekly unemployment claims decreased by 111,000 to a seasonally adjusted 730,000 last week, according to the Labor Department. It was the lowest weekly level of new applications to regular state programs since late November and the biggest weekly drop since last summer.
Apparently, consumers used their stimulus checks to boost spending in January. The Commerce Department reports that retail sales, a measure of purchases at stores, at restaurants and online, jumped a seasonally adjusted 5.3 percent from a month earlier. The increase followed three months of decline during the holiday season and was the strongest gain since last June.
Consumer spending is the main driver of the U.S. economy, accounting for more than two-thirds of economic output.
Home prices continue upward trend
The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 10.4 percent in the year that ended in December, up from a 9.5 percent annual rate the prior month. December marked the highest annual rate of price growth since January 2014.
House-buying demand has surged in recent months, driven by record-low interest rates. Sales of previously owned homes, which make up the bulk of the housing market, rose in 2020 to their highest annual level since 2006, according to the National Association of Realtors.
Cass reports are in
Cass Information Systems highlighted advances in the company’s shipments and expenditures indexes during January. The shipments component increased 8.6 percent year-over-year with the expenditures index surging 19.5 percent.
The data showed shipments improved 3 percent from December on a seasonally adjusted basis, which was the largest move since September.
Compared to January 2019, the shipments index is still 1.6 percent lower.
The truckload linehaul index, a measure of linehaul rates on a per-mile basis excluding fuel and accessorials, moved 7.3 percent higher year-over-year in January and 2.3 percent higher from December. This was the seventh straight month of sequential increases in the index, which is now up 8.1 percent since June.
Implied freight rates, or expenditures divided by shipments, jumped 10.1 percent year-over-year. The increase shows that freight spend is increasing at a much faster pace than shipment growth. The implied rate has been in positive territory for five of the past six months. Truckload represents more than half of freight spend in the dataset.
ATA reports higher tonnage
American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 1.4 percent in January after rising 1.2 percent in December. In January, the index equaled 114.6 (2015=100) compared with 113.1 in December.
Trucking serves as a barometer of the U.S. economy, representing 72.5 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 11.84 billion tons of freight in 2019. Motor carriers collected $791.7 billion, or 80.4 percent of total revenue earned by all transport modes.
LTL General rate increases announced
Less-than-truckload carrier Old Dominion Freight Line announced a 4.9 percent general rate increase for freight carried under various general tariff codes. The increase will be effective March 1.
The rate bump follows similar announcements from LTL carriers in recent weeks. Most of the increases are in the 5 percent to 6 percent range, likely indicative of tightening LTL capacity and a rate-disciplined environment.
Saia’s 5.9 percent rate increase began on Jan. 18 and logistics provider ArcBest a 5.95 percent GRI for LTL services starting Jan. 25.
Yellow, formerly YRC Worldwide implemented a 5.9 percent increase at the beginning of February. Asset-light LTL provider Forward Air installed a 6 percent GRI at the same time.
Most carriers implement annual GRIs for noncontractual freight to absorb cost inflation, including driver and dockworker pay increases and ongoing investments in tech and real estate. In 2021, driver recruitment and retention expenses represent one of the biggest cost headwinds for carriers. Fuel expenses have moved higher as well, but separate surcharge mechanisms are in place to capture fluctuations.
The trucking economy appears to have stabilized, according to DAT Freight and Analytics. The national average spot truckload van and refrigerated rates were virtually unchanged during the first week of February, a sign of price stability after January’s declines, DAT reported Feb. 10.
Rates for vans were $2.29 a mile, flatbeds were $2.47 a mile, and refrigerated trucks $2.55 a mile.
From there the rates moved up. In the week ending February 21st the record cold and winter storms made operations very difficult. More than 70 percent of the country was covered in snow, dry van and reefer spot rates skyrocketed last week. Capacity tightened rapidly as major interstates were reduced to a crawl, pushing record-level load volumes into the spot market, as contracted carriers struggled to fulfill committed capacity.
The national average dry van spot rate moved to $2.34 per mile in that week.
U.S. freight railroads moved 480,483 carloads and intermodal units during the week ending Feb. 13, up 0.3 percent compared with the same week in 2020, according to Association of American Railroads (AAR) data.
Carloads declined 7 percent, while intermodal volume climbed 6.9 percent.
Five of the 10 carload commodity groups that AAR tracks every week posted an increase. They included grain, chemicals, and forest products. Commodity groups that posted decreases included coal, nonmetallic minerals, and motor vehicles and parts.
For the first six weeks of 2021 compared with the same period in 2020, U.S. railroads logged 3,079,821 carloads and intermodal units, up 4 percent.
At Wagner Logistics
Wow what a cold snap. Cold and snow hit our southern locations particularly hard as towns don’t have the plows and other winter infrastructure to deal with the snow. My heart goes out to everyone who dealt with frozen and broken pipes as well of those who went without power.
Despite the bad weather, the long list of projects being worked, and progress is made at Wagner. My thanks to the folks in info tech, engineering, and HR for the hard work they put in moving the enterprise forward.
I also want to thank all the Wagner team who went to Los Angeles to get the Montebello distribution started. We appreciate the can-do, bring it spirit.
Do you have a transportation RFP or distribution project this year? We are celebrating our 75th year of history 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 20 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!