Weekly Transportation Update: Price inflation was a bit stronger in November for consumers and businesses

• Real exports and imports of goods plunge in October.
• Applications for new businesses rise sharply in November, including in transportation.
• Spot rates increase for all three principal equipment types in the latest week.
• Carload and intermodal traffic returns to prior patterns after holiday distortions. 
  
  

Overview

Inflation might be moderating broadly, but it isn’t going quietly. Price increases were stronger in November for consumers and businesses, and food prices were key drivers in both cases. What’s that got to do with the price of eggs? Quite a bit, actually.

Some other recent indicators showed notable changes. International trade in goods plunged in October – hardly surprising given a push to minimize the impact of an anticipated container port strike. Meanwhile, applications for new U.S. businesses surged in November, and the transportation and warehousing sector outpaced the nationwide gain.

A welcome change for transportation stakeholders was a sharp drop in fuel prices in the latest week as diesel fell to its lowest price since September 2021.

Consumer and producer pricing

Consumer prices in November rose at their fastest rate since March, and prices at the producer level rose by the most since April. Prices in both cases were stronger y/y than they were in October.

The Consumer Price Index (CPI) for all items increased 0.3% m/m, seasonally adjusted. As usual, shelter accounted for a big chunk of the increase, although the November gain was not quite as large as the one in October. Food prices accelerated, especially food at home, which rose 0.5% m/m. Prices for food at home have not risen that much in a month since January 2023.

The increase in prices for food away from home was not as great at 0.3%, but the y/y increase was 3.6% – two points higher than the 12-month change in prices for food at home.

Excluding the volatile food and energy sectors, the CPI increased 0.3% m/m for the fourth straight month. The 12-month change in the unadjusted index held at 3.3%, also for the fourth straight month.

Food prices were the principal factor behind a higher Producer Price Index (PPI) for final demand in November. The PPI for final demand increased 0.4% m/m, seasonally adjusted. The index was up 3.0% for the 12 months ended in November – the largest y/y comparison since February 2023.

Most of the gain in the PPI for final demand was due to final demand goods, and 80% of that increase was due to foods. The index for chicken eggs surged nearly 55% m/m and alone accounted for a quarter of the entire increase in prices for final demand goods.

Unlike eggs, pricing for freight transportation services created no upward pressure on pricing at the producer level. The PPI for truck transportation of freight declined 0.2% m/m and was down 1.3% y/y. The PPIs for LTL and long-distance specialized trucking were flat m/m, and the general freight truckload PPI declined 0.3%.

International trade in goods

The pull-forward of imports and exports to avoid a disruption due to the October shutdown of container ports from Texas to Maine seemed apparent from data in August and September, but a subsequent plunge in activity seems to confirm it.

Adjusted for inflation, both exports and imports of goods fell sharply in October. The larger decrease was in imports, which fell 5.5% – the largest drop in a single month since November 2022. The largest decrease, 8.9%, was in capital goods, which also is the largest category of imports by value. Computer-related goods have led the recent run-up in imports of capital goods and also led October’s big drop.

All other import categories declined m/m as well. Real imports were up 2.2% y/y, but that is the weakest comparison since January.

Real goods exports fell 4.2% m/m for the largest decrease since April of last year. A surge in exports of miscellaneous goods offset much of the weakest elsewhere as all other categories saw declines that were larger than the total decrease.

The sharpest m/m drop on a percentage basis was in automotive, although the decreases in absolute terms were larger for capital goods and industrial supplies, which are much larger categories.

Real exports were down 1.1% y/y for the first negative comparison since March. Automotive exports recorded the largest y/y drop at 23.1%, which is somewhat surprising given that United Auto Worker strikes crippled vehicle production in October 2023. The disruption of roll-on/roll-off operations due to the brief strike might have been a factor.

Business formation

Perhaps in response to the election outcome, applications for new businesses in the U.S. surged in November, rising 5.5% m/m, seasonally adjusted. The increase was the largest in a single month since April 2021. Applications were down 2.2% y/y, but that is the least negative comparison since April of this year.

The percentage increase in applications for transportation and warehousing (T&W) businesses was even larger. New applications for T&W firms rose 6.2%, the largest increase since April 2021. Applications were up 1.8% y/y – the strongest comparison since February 2022 and only the second positive   y/y comparison during that period.

The Census Bureau does not publish more granular data, but applications for trucking businesses logically would be among the primary drivers of month-to-month changes within transportation and warehousing because of relatively low barriers to entry.

Spot metrics

For the first time since mid-October, all three principal equipment types saw increases in broker-posted spot rates in the Truckstop system during the week ended December 6 (week 49).

Refrigerated spot rates rose sharply after the prior week’s big drop had wiped out four weeks of gains. Flatbed spot rates saw their strongest increase since early October following Hurricane Helene. Dry van’s spot rate gain did not match week 48 but otherwise was the strongest since mid-October.

For more on week 49 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.

Rail/Intermodal

After two weeks of distorted rail traffic data resulting from this year’s late Thanksgiving holiday, carload and intermodal volumes this week came in at levels more typical of recent months. For the week ending December 7, total North American rail traffic was up 2.2% with intermodal up 6.8% and carloads down 2.6% y/y.

Within carloads, the strongest y/y growth in the latest week was in grain, up 14.1%; chemicals, up 6.0%; and farm products, up 5.5%. The greatest weakness in carloads this past week came from autos, down 15.1% y/y due partially to the strong 2023 figures as automakers recovered from the auto worker strike that affected General Motors, Ford and Stellantis.

Intermodal’s strong y/y volume growth can, once again, be attributed to the western carriers, BNSF and Union Pacific, which is a trend that will likely continue through the rest of the year. This sustained growth comes as shippers attempt to navigate around the risks of another port strike and potential tariffs by pulling forward inventories, likely at the expense of 2025 volumes.

Volumes for the eastern carriers, CSX and Norfolk Southern, came in roughly in line with 2023 levels. Interestingly, intermodal traffic for the Canadian carriers also came in at 2023 levels and have not jumped following the conclusion of the Canadian port strikes. This differs from what happened with the eastern carriers following the re-opening of ports after the brief strike in October.

YTD, total rail traffic is up 2.3%. Intermodal is up 7.5% but carloads are down 2.9%.