Overview
Inflation was quite tame at both the consumer and producer levels in June as overall consumer prices actually declined m/m for the first time since May 2020. Relief for both consumer and producer inflation was centered within energy due to falling gasoline and diesel prices during the month. One notable development was a decline in pricing for truck insurance premiums after more than a year of gains.
In other data, new applications for transportation and warehousing businesses in June saw their largest increase since August 2022. Coupled with data showing recent gains in new trucking authorities, the data reinforces our assessment that the truck freight market has bottomed out.
Consumer Price Index
The weakest increase in shelter prices since January 2021 and the largest decrease in gasoline prices since November resulted in the first m/m decrease in consumer prices since May 2020.
The Consumer Price Index for all items dipped 0.1%, seasonally adjusted, in June. The 12-month change in the unadjusted index was 3.0% – the lowest rate of inflation since March 2021.
The overall commodities category fell 0.4% for the second straight decrease of that magnitude. The commodities price index also was down 0.4% y/y, which is the first y/y decrease since July.
Producer Price Index
The Producer Price Index for final demand ticked up 0.2% m/m, seasonally adjusted, in June as pricing gains for services more than offset decreases in prices for goods. The unadjusted index was up 2.6% for the past 12 months for the largest comparison since the 2.7% 12-month change in March 2023.
Pricing advances for services were fairly dispersed within the category of trade service, but the drop in pricing for goods was mostly due to gasoline. Final demand services was up 0.6% m/m. Final demand goods was down 0.5%.
The Bureau of Labor Statistics singled out one particular category that did not bolster services pricing. The PPI for truck transportation of freight fell 1.2%. However, it is unclear to what degree diesel prices are intertwined with the PPIs for freight transportation primary services. The diesel PPI fell 3.8% after plunging nearly 20% in May. The PPI for transportation and warehousing declined 0.4%.
PPIs were down m/m for the key trucking sectors. The general freight truckload PPI fell 2% and was down 3.6% y/y. The PPI for long-distance specialized trucking declined 0.7% and was down 3.9% y/y.
Trucking
Broker-posted spot rates in the Truckstop system for dry van and refrigerated van equipment recorded rare gains during the week ended July 5 (week 27), although the timing of the Independence Day holiday likely was a factor.
Rates for both equipment types typically fall sharply during week 27, but most of the week preceded the holiday. In most years, almost all pre-holiday rate strength occurs during week 26. Rate decreases this week are the seasonal expectation.
The total broker-posted rate increased 1.7 cents after ticking up a fraction of a cent during the prior week. Total rates have not risen in week 27 since 2019, which was the most recent year in which the Fourth of July fell on a Thursday.
Total rates were just 0.1% below the same 2023 week – the strongest y/y comparison since June 2022 – and 7% below the five-year average. Rate gains during the current week (week 28) are rare, and the holiday distortion is no longer a factor.
Although the timing of the holiday disrupted rate trends a bit, volume fell sharply, plunging 43.1%. The decline in refrigerated was somewhat smaller than it was in dry van and flatbed.
For more on week 27 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Rail/Intermodal
For the rail carload sector, the week ended July 6 was basically a repeat of the same 2023 week in terms of overall volume although performance differed sharply by commodity group. North American rail carload traffic was up 0.4% y/y, according to the Association of American Railroads.
Three commodity groups – chemicals, grain, and petroleum/petroleum products – saw double-digit positive comparisons y/y. Two groups – coal and nonmetallic minerals – fell by nearly 10%. In all, five groups saw y/y gains while five saw declines.
The intermodal sector, meanwhile, was much stronger than it was in the same week last year. North American intermodal loads were up 16.7% y/y. The difference between carload and intermodal performance is an easy y/y comparison for intermodal due to due to a brief port strike in Western Canada.
While U.S. intermodal traffic was up y/y roughly to the degree it has been most of the year, Canadian intermodal volume was up 71.5% y/y. Last year’s port strike in Canada was not settled until July 13, so another strong y/y performance is likely this week.
Cumulative carload traffic for 2024 is down 3.2% from the same 2023 week. Only four commodity groups – petroleum/petroleum products, chemicals, grain, and motor vehicles and parts – are higher than they were during the first 27 weeks last year. Cumulative intermodal volume is up 8.2% y/y.
