Overview
The principal economic data released this week was on pricing, and inflation remained tame at the consumer and producer levels. However, they were not fully in sync, largely owing to differences in how gasoline and diesel prices performed in December.
Freight transportation was involved in a major news story this week as the U.S. and allies attacked Houthi rebel positions in Yemen in an effort to thwart attacks on commercial shipping over the past several months.
Diesel prices
Producer-level inflation often moves in the same direction as consumer inflation, but that did not happen in December. A major reason for the divergence is that gasoline prices rose modestly during the month while diesel prices, which disproportionately affect businesses, fell sharply.
The Producer Price Index for final demand edged down 0.1% m/m, seasonally adjusted. Final demand goods fell 0.4%, and about half of the decrease resulted from a 12.4% drop in the index for diesel. Final demand services was unchanged as it had been in both October and November.
The indexes for trucking services were uniformly lower m/m, although the sharp decline in the diesel PPI could have played a role. The general freight truckload PPI fell 3% and was down 18%y/y.
The less-than-truckload PPI declined 2% but was up 1.1% y/y. Aside from October’s 3% y/y comparison, the LTL PPI was strongest y/y since February.
Long-distance specialized trucking did not see as much deterioration m/m as truckload and LTL, easing just 0.5%. The specialized PPI in December was down 6% y/y.
U.S. international trade in goods
Adjusted for inflation, exports and imports of goods each declined more than 2%, seasonally adjusted, during November, but both were still higher y/y.
Real exports declined 2.3% m/m to the lowest level since June, seasonally adjusted. The largest decrease was in automotive vehicles and parts, which were down 5.7% – a decline that likely was at least partially related to the lingering effects of the United Auto Workers strikes.
Real exports were up 0.7% y/y. Categories that were higher y/y include foods, feeds, and beverages and capital goods. Real exports of consumer goods were down 5.7% y/y.
Real imports fell 2.4% m/m. The sharpest drop was in consumer goods, which were down 6.4%. Imports were up 1.8% y/y, led by automotive vehicles and parts, which were up 18.4%.
Spot Rates
Broker-posted rates in the Truckstop system fell during the week ended January 5 (week 1) as they always do during the first week of the year, although the decrease was the smallest for the beginning of a year since 2018.
Refrigerated spot rates gave back less than 20% of their gains in the prior two weeks, and the decline in dry van spot rates was barely more than a penny. Flatbed spot rates, which usually decline in the first week of the year, rose slightly. Total load volume was up sharply.
The total broker-posted rate decreased 7.4 cents after rising nearly 10 cents during the previous week. Rates were nearly 11% below the same 2023 week and about 6% below the five-year average.
Spot rates always fall during the first week of the year as capacity starts to normalize beyond the holidays, but the decrease was the smallest since the first week of 2018.
For more on week 1 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Rail/Intermodal volume
Not surprisingly, the first week of 2024 saw a significant sequential increase in North American rail carload and intermodal traffic after the holiday lull. Railcar loadings rose 13% week over week while intermodal loadings jumped nearly 19%.
The only major categories to see decreases from the prior week were pulp and paper, which dipped 1.6%, and chemicals, which eased 0.4%. However, both had bucked the trend and risen during the final week of 2022. Economically sensitive rail freight improved nearly 11% week over week.
Comparisons versus the first week of 2023 were more mixed. Overall, rail carloadings were up more than 1%, but some categories were down sharply y/y, including farm products, motor vehicles and equipment, and crushed stone, sand, and gravel. Economically sensitive freight was up 1.5% y/y.
Intermodal loadings were solidly ahead of year-earlier levels at nearly 13% higher overall. However, the large y/y increase is attributable mostly to Mexican intermodal traffic, which was up about 330% y/y. U.S. intermodal loadings were up 3.7% y/y while Canadian intermodal loadings dipped 1.5%.
The huge y/y jump in Mexican intermodal traffic apparently is related to the backlog in traffic that occurred in December when U.S. Customs and Border Patrol shut down two rail bridges at Eagle Pass and El Paso, Texas, for about a week due to the migrant surge. GMXT moves about 24 trains a day at those locations. That shutdown ended just before Christmas, so the holidays added to the effect of the backlog. Going forward, Mexican intermodal traffic might see some lingering positive comparisons y/y due to new intermodal service being offered by BNSF, GMTX, and J.B. Hunt.
As has been the case for months, intermodal comparisons varied greatly by equipment type. North American intermodal container loadings were up nearly 15% y/y while intermodal trailer loadings were down about 28%.
