A Glance Over Freight Index in July

A key monthly indicator of U.S. transportation activity weakened significantly in July, reflecting the sluggishness of the U.S. economic system and signaling continued stagnation for the balance of 2011.

The index, compiled by freight cost and auditing agency Cass Info Methods Inc., found that shipments from more than 100 of the largest U.S. shippers declined 3.7 percent over June levels. Freight expenditures from those companies declined sequentially by 2.1 % last month as decrease volumes muted spending on transport companies, the Cass index said. The report measures roughly $17 billion in annual transport spending by these shippers.

Regardless of the decrease volumes, trucking companies are reporting having to show down loads on account of a scarcity of capability, in accordance with the Cass report. Load boards-the place shippers usually go to put up masses for tender-are full as shippers, and even some carriers, have turned to posting masses that need to maneuver, the report found.

"Unfortunately, the rationale for this example shouldn't be a burgeoning freight market, but slightly... the capability constraints, for each vehicles and drivers, that the trade is experiencing," mentioned Rosalyn Wilson, senior analyst for Vienna, Va.-based mostly Delcan Corp. and author of the Cass report. Wilson additionally produces the annual "State of Logistics" report prepared in conjunction with the Council of Supply Chain Management Professionals.

Wilson stated trucking companies are reporting an acute scarcity of drivers, although they've rigs available.

Maybe more troubling is the decline in rail carload and intermodal site visitors in July from June levels. Intermodal, specifically, has shown regular gains by means of the recession and subsequent restoration, so the decline in July bears watching, Wilson said.

Despite the decline in July, freight expenditures are up 29.5 percent from yr-earlier levels, based on the Cass report. The year-on-year increase is because of tightening capability situations that have supported spikes in spot charges, the report said.

Wilson said rising gasoline, labor, and insurance coverage prices for carriers have offset the impression of price will increase, the latest of which had been introduced in July by a number of much less-than-truckload carriers. Elevated prices have made it onerous for carriers to make headway in elevating profit margins, she said. "The tightening of capability is creating alternatives to raise charges, but it is unclear if this will be sustainable if volumes proceed to dwindle," she added.

Wilson mentioned the U.S. economy is in a vicious cycle the place businesses won't hire and make investments till they see clear proof of stronger client spending, while consumers will not spend while unemployment stays elevated and job prospects are cloudy. The recent congressional combat over raising the nation's debt ceiling did nothing to instill confidence in consumers, whereas the settlement itself shouldn't be a constructive for the economic system as a result of it failed to realize the wanted spending reductions, she said.