We are midway through the year, the economy looks strong and the logistics industry is trucking along. As we round the bend to the backside of the year, here are the latest facts, figures and trends in shipping and logistics.
Read the entire Q1 logistics industry update for a complete snapshot of what happened earlier this year.
Economic growth and employment continue to be strong
Let’s dive into the numbers! GDP increased at an annual rate of 2.2% throughout Q1 and the most recent estimates put the highest Q2 growth at 4.8%. The lowest estimates have Q2 GDP growth at 2.6%, so an increase over Q1 is expected across the board.
The latest economic employment report from the Bureau of Labor Statistics shows that non-farm payroll employment increased by 223,000 in May, dropping the unemployment rate down to 3.8%, the lowest it has been since 2000. Transportation and warehousing added 19,000 jobs and manufacturing added 18,000 (mostly from durable goods).
DAT Van Load-to-Truck Ratio is still declining
After sharply dropping from 9.9 in January to 7.0 in February, the DAT Van Load-to-Truck Ratio held steady throughout Q2, hovering between 6.5 and 7.0. At this time in 2017, the ratio was at 5.9. In 2016, the ratio was 2.9.
Capacity also tightened in May; loads were up by 14% with only an increase of 10% for trucks. The latest reports in June show that van loads were down 5%, while truck posts on DAT load boards increased 7%. These latest numbers caused the load-to-truck ratio to decrease 11% (down to 9.2) loads per truck.
The capacity crunch is still in full effect
Businesses are selling product, but there still aren’t enough carriers to haul it. To combat the capacity crunch, carrier companies are boosting trucker pay (median pay is up by 15%) to entice more people to enter the field. But carriers are having trouble keeping up with the amount of freight that needs to be hauled. Some carriers are reporting a 400% increase in turndown rates when compared to the previous year.
ELD mandates are forcing carriers off the road
The big news in Q1 was the final implementation of new ELD Mandates for carriers on April 1st, resulting in a jump in rates as well as a 2.7% decrease in truck capacity. Estimates based on surveys concluded that upwards of 3% of drivers would pull themselves off the road rather than be monitored while driving.
Cass Information Systems reported in May that the ELD Mandates initially hurt the capacity/utilization of carriers, especially smaller trucking operations, but the good new is that many have now recovered some of their losses through new gains in efficiency.
Does the capacity crunch have you worried?
Not when you work with King. We are implementing a robust qualification program to find the best carriers for clients. We monitor everything from insurance and safety records to equipment and many other factors. But despite our rigorous expectations of carrier quality, we are expanding our network of carriers to offer more shipping options to our clients.
Updates on the Cass Freight Index
The Cass Freight Shipments and Expenditures Indices are signaling that the U.S. freight economy is very strong from both a volume and pricing perspective. These strong numbers are in spite of rising interest rates; the Federal Reserve raised rates from 1.5% to 1.75% in late March, the sixth increase since the financial crisis.
The latest Cass Freight Index report indicates that the first five months from 2018 have remarkably strong. Year-over-year (YoY) increases from May, April and March all exceeded increases from the past five years. The latest numbers are:
- Shipments = 1.307 (11.9% YoY change, 5.9% month-to-month change)
- Expenditures = 2.875 (17.3% change, 4.9% month-to-month change)
The Tonnage Index is way up
The last report by the American Trucking Association (ATA) shows the Seasonally Adjusted Tonnage Index at 112.5, a 2.2% increase over March (110.1) and a 9.5% increase over April, 2017. This was the largest YoY increase since October, 2017. This year’s numbers have well outperformed those in 2017. The Tonnage Index has increased 8% over the first four months of 2018, well over the annual gain of 3.8% last year.
Diesel Fuel Prices continue to be a huge concern for the industry
Diesel fuel prices fluctuated in Q1, starting the year at $2.97, peaking at $3.09 in February and ending at $3.01 in March, according to the U.S. Energy Information Administration.
Prices climbed steadily in Q2, reaching as high as $3.16 in April and $3.29 in May before slightly dropping to $3.22 at the end of June. Although diesel fuel prices have remained steady so far this year, annual trends have been extremely volatile, rising and sinking between $2.50 and $4.00 since 2007.
Enough of the numbers! What’s going on with King?
While we’d love to continue diving deeper into the numbers all day, we have some other updates that we are excited to share.
Recently, we announced the opening of a new operation based in the Chicagoland area (Glendale Heights, IL). We are excited to offer our custom logistics solutions to a new base of clients in and around the Windy City. This new warehouse and base of operations will allow us to better serve our clients, and it will also enable us to expand our CoastalPlus program (LTL freight and PTL solutions), bringing new advantages not only to MN-based shippers, but to those located all across The Midwest.
We are also expanding our team to meet the needs of our growing client base. This includes maintaining an after-hours shipping team who is prepared to share updates with clients and respond to incidents as they occur. No matter where your freight is headed and when, our hard-working team will be monitoring its progress and keeping you updated every step of the way!
Don’t forget to thank a driver during National Truck Driver Appreciation Week (September 9-15, 2018). At King, we always show our appreciation by offering drivers food, drinks, prizes and more throughout the week! Let’s join together and thank the more than 3.5 million men and women who keep the U.S. economy running 365 days a year!
Ready to talk solutions? So are we. Contact our team today!