Trucking & Rail Shipments Sink as US Goods-Based Sector Slows

Weakness in transportation deepens. Freight rates still rising, but also coming under pressure.

It has become a cacophony across earnings reports by trucking companies and railroads: Shipment volumes are declining, and revenues are propped up by higher freight rates, but now freight rates are coming under pressure too, as companies are getting more aggressive to pick up shipments. The latest two to report were YRC Worldwide, one of the largest truckers in the US, and BNSF Railway. Before them, it was J.B. Hunt and others.

This is summarized by the Cass Freight Index. Freight shipment volume in the US across all modes of transportation – by truck, rail, air, and barge – in April fell 3.2% compared to April last year, the fifth month in a row of year-over-year declines, and the first batch of declines since the transportation recession of 2015 and 2016. The chart shows the changes in percent for each month compared to the same month a year earlier:

The Cass Freight Index tracks shipments of goods for the consumer and industrial sectors by all modes of transportation but doesn’t track shipments of bulk commodities, such as grains.

Also, the Cass Freight Index for Shipments ticked down sequentially from March to April, which is atypical for this time of the year. The last two times this happened was in 2013 and 2009. Some had blamed the slowdown in the winter on the weather, but there should have been a pickup in March and April, and the opposite happened.

The top black line in the chart below delineates the phenomenal boom in shipments in early and mid-2018 and how it petered out later in the year. The index went negative year-over-year in December. The red line shows the year-over-year declines in 2019 and the unusual down-tick in April:

This decline in shipments is showing up in quarterly earnings reports. J.B. Hunt, the largest trucker in the US, started this trend in a big way a month ago, when CFO David Mee said that the company’s “results obviously revealed headwinds in parts of our business,” and added, “In Intermodal, volume, or lack thereof, is obviously the main story.”

Last week, BNSF reported that revenues rose 2% in the quarter year-over-year, but shipment volume fell 5%.

Of the four categories BNSF split out, volume inched up only in “industrial products” (+1%), and fell in the other three: Coal (-10%); agricultural products (-7%), maybe due to the trade war, or whatever; and – jangling some nerves – consumer products (-6%).

And also last week, YRC reported that Q1 operating revenues ticked down 1%, on sharply dropping tonnage and shipments: LTL (less than truckload) tonnage per day dropped 5.8% year-over-year, and LTL shipments fell 4.1%. Total tonnage per day fell 3.0%, and total shipments per day fell 4.1%.

There is usually a litany of factors that are cited why this decline happened, including the weather. And this was the case at YRC as well. But the company also said, “As we move through 2019, we will continue to prioritize yield over tonnage” – meaning, the company will try to keep its freight rates high, even if the shipment volume declines.

This has been the theory among the large truckers – but signs are appearing that freight rates are now coming under pressure too.

Average spot rates for hauling van trailers have been falling ever since the peak last June ($2.32 per mile). By April they’d dropped to $1.81, according to DAT.

At $1.81, the average spot rate was 20% below the average contract rate, the largest gap over the past 12 months, which is putting pressure on contract rates, that have already started to inch down ever so slowly from prior months. DAT explained its post, “Vans still waiting for the spring surge”:

The national average load-to-truck ratio for vans has lingered at or below 2 loads per truck since January, due to the availability of trucks. For comparison, we typically consider a ratio between 2.5 and 3 to be balanced, while ratios below 1.75 usually lead to lower rate.

Cass, in its report for April, released today, confirmed this situation:

The weakness in spot market pricing for many transportation services, especially trucking, is consistent with the negative Cass Shipments Index and, along with airfreight and railroad volume data, heightens our concerns about the economy and the risk of ongoing trade policy disputes.

In addition, the report highlights several “concerns” for the goods-based economy:

  • “The severe declines in international airfreight volumes (especially in Asia)”
  • “The recent swoon in railroad volumes in auto and building materials”
  • “Volumes of chemical shipments [essential for manufacturing processes] have lost momentum in recent weeks, despite the rally in the price of WTI crude.

But pricing is still hanging in there, as YRC pointed out: priority for now is “yield over volume.”

The Cass Freight Index for Expenditures confirms this trend. The index, which tracks spending on all modes of transportation – truck, rail, air, and barge – and includes fuel surcharges, reflects the total amount spent by shippers, such as retailers or manufacturers.

After a historic peak last September, with a year-over-year price surge of nearly 20%, the index started backing down from those price increases but continues to reflect strong freight rate increases. In April, the Expenditures Index rose 6.2% from April last year – even as shipment volume has been dropping:

But spot market rates are indicating that contract rates too will come under pressure. The Cass report:

Although demand is no longer exceeding capacity in most modes of transportation, realized pricing power is still being reported at the contract level in some modes. Unfortunately, weakness in spot market pricing, especially in trucking, suggests that contract pricing is under increasing amounts of pressure and is at risk of going negative by the end of the year.

Shippers will welcome this. They have complained in their earnings reports all last year about surging transportation costs that were eating into their margins. And they can’t wait for these pressures to dissipate.

Trucking companies started reacting months ago, and by now they have made a hard U-Turn, that has become apparent in the collapsing orders for Class-8 Trucks. Read… Trucking Skids into Downturn after Phenomenal Boom

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  77 comments for “Trucking & Rail Shipments Sink as US Goods-Based Sector Slows

  1. Satya Mardelli
    May 14, 2019 at 9:58 pm

    Last week I was on I-40 between FLG and ABQ. The number of freight trains (BNSF) was unusually large. In some cases one every 15 minutes heading westbound. Based upon my speed I estimated they were about 20 miles apart.

    Nearly all the trains were double stacked with a majority pulling JB Hunt containers

    What stood out was that these trains were using only 2 locomotives but we’re pulling around 80 rail cars.

    I’m thinking, these must be empty containers boxes. I know nothing about rail freight but have observed rail traffic for years along I-40. Usually I see 4 or 5 locomotives with a normal length train. I always assume the boxcars are loaded when I see diesel smoke pouring out of the stacks on all 5 locomotives.

    Again, this is anecdotal evidence observed by someone (me) who knows nothing about actual rail movements. I thought I’d share it for those who do know something about this business and might be able to fill in the blanks.

    • Kevin Wayne Kennedy
      May 14, 2019 at 11:27 pm

      I noticed this as well. Also was in “rush hour” traffic heading east through St. Louis MO over the I-270/255 Mississippi River and drove for 5 minutes— there was NO traffic heading into the city. Also have noticed that “rush hour” traffic has dwindled to near nothing. Large truckstops have large amounts of empty truck parking that should be full historical this time of year.

      The REAL economy is about to fall off a cliff. Trade War [which is necessary to take on China bc if we don’t do this NOW, our kids will be toast after China dominates the world] is going to bite in the short-term. We MUST stop thinking “short-term Quarterly results” and start to think LONG-TERM and even “Generational”. We are a relatively young nation vs China and others.

      Baltic Dry Index? How is that going? Probably frozen up I guess? Non-existent.

      • alex in san jose AKA digital Detroit
        May 15, 2019 at 1:41 am

        It’s pretty far from trucking but NPR just had a big fund drive and it was the most dismal, depressing fund drive I’ve ever heard over years of listening to NPR. The phones were just not ringing.

        They’ll probably be kept alive but the noblisse oblige of a plutocrat or two, but it shows the hollowing out of the economy for the bottom say 90%

        • May 15, 2019 at 10:23 am

          “NPR just had a big fund drive and it was the most dismal, depressing fund drive I’ve ever heard over years of listening to NPR. The phones were just not ringing.”

          More dystopian fiction brought to you by alex in san jose AKA digital Detroit.

          The 2 radio stations that feature NPR that are now fundraising in my area, which I think includes the station you’re listening to, have no such problem. Fundraising going just fine. Thank you.

        • alex in san jose AKA digital Detroit
          May 16, 2019 at 2:09 am

          Wolf – I wanna be wrong! Please let me be wrong!

          The Silicon Valley I live in is pretty dismal, economically speaking. It’s probably no accident that I’m finding “my people” among Japanese-Americans who came here as poor farmers, lost everything in WWII, and know how easy it is to end up with nothing with little advance warning. The particular variant of Buddhism we follow was founded in the 1200s, an unstable time and a hard time in Japan. A religion for hard times.

          I’m just counting off the days until I can get back to Hawaii. As I keep reminding myself, a classical Hawaiian had his hale (shack) his malo (loincloth) and not much else; mainly his voice, the mele (songs) and legends. A poor Japanese farmer had not much more, but they had 100% literacy and they had their tales and legends, customs, and simple things like the shakuhachi, taiko drums etc.

          The whole idea is how to get the most from very, very little. This is the future for 95% of us.

      • Ppp
        May 15, 2019 at 9:40 am

        Now you understand why banks are keeping their money. They won’t even buy treasuries from the fed to sell them back at a guaranteed profit. The point is that economic activity is rapidly coming to a halt. VERY big depression is right around the corner. The worst mistake the U.S. government is making is not preparing the country for this. Fatal mistake. Bad! as Donald would say.

        • Wisdom Seeker
          May 15, 2019 at 2:06 pm

          Ppp, tell me how “the US government” can “prepare the country for this” without causing exactly the mass panic that they would be trying to avoid?

          Either you’ve been to the rodeo and you already know what to be doing, or its your turn to get thrown off the bull the hard way…

      • Ppp
        May 15, 2019 at 11:05 am

        The problem is that China cannot control its industrial espionage. It is done all over the country, indeed, all over the world. That is why there will be no real deal. Which is why they keep talking about some cosmetic deal which solves nothing. China can’t deliver. End of story.
        Period.

        • Jon Snow
          May 15, 2019 at 12:49 pm

          We can always talk about the leaked materials that show that the NSA and other alphabet spy agencies all have a high focus on economic espionage. But wait a minute, I didn’t see that on this week’s 2-Minute Hate.

      • Escierto
        May 15, 2019 at 1:33 pm

        Instead of fighting the future, why not embrace it? Do you think we can fight China and win? All my kids are learning Mandarin and Spanish so they can operate in the new world.

      • Gandalf
        May 15, 2019 at 3:55 pm

        KWK,
        While it’s true that China has been doing a lot of theft and copying of technological and trade secrets, your post greatly ignores two key facts that most Americans haven’t come to terms with:

        1. We are well past the 30 years after WWII when the US comfortably coasted along at the top of the world because the rest of the industrialized world had been destroyed or bankrupted by the war. Lots of countries have caught up with us since then and in many ways surpassed the US, without having to resort to intellectual theft. Germany, Holland, and other European countries, Japan, South Korea, all have grown and developed high tech industries that match or far surpass what the US has.

        China too has accomplished much that has nothing to do with just stealing trade secrets. While Trump throws money at corn farmers to buy their support during this trade war, China’s government has been throwing money into high tech areas like quantum computing, solar energy, electric cars, AI, genetic engineering, and building its own chip fabrication plants. China doesn’t just make cheap trinkets- they make top of the line iphones and HD TVs. The solar panels covering my patio were made in China – they are 5 years old now and new ones are capable of twice the power generation per panel. This is new tech, made in China. And more- from nothing, China built up its own industries to produce titanium metal and neodymium, key to modern high tech electric motors and speakers – the US currently produces neither

        I’m posting this from Montreal, at the International Society of Magnetic Resonance in Medicine. In the late 80s and early 90s, this meeting used to be dominated by US based researchers and by General Electric, which at one time had over 2/3 of the US MRI market, due largely to its early research efforts to produce the first commercial 1.5T MRI scanners. Today, GE’s market share is pathetically shrunken in size – Jeffrey Immelt gutted GE’s research section during the sharp MRI downturn of the mid 90s and it never recovered. Philips (Holland) and Siemens (Germany), with more socialistic corporate cultures not tied to quarterly profits and stock price, kept on developing MR technology and by the mid to late 2000s, were easily 3-5 years ahead of GE. Today, presentations at the ISMRM come from all over the world, with far more from Europe and Asia and elsewhere than from the US.

        So, it is the WORST MISTAKE to simply scapegoat China and say that is why US industries have suffered and a trade war is the answer. This is just the usual Trump simplistic scapegoating to reduce a complex problem for his supporters who want only simple one word answers: Chjyiannna.

        The truth is US industries have suffered because they are coming down from an abnormal post WWII era where they had NO COMPETITION. The rest of the world has lots of smart and hard working people capable of competing with the US without need for industrial espionage. If American industries continue to focus only on quarterly profits and their stock price instead of thinking long term, they will continue to decline and suffer. If the US government continues to spend its money on things like supporting corn farmers instead of producing high tech stuff like titanium and neodymium, we will fall farther behind (Note: it wasn’t always this way – USG recognition of the importance of helium and the fact that it’s a byproduct of natural gas production jump started production of helium in the US – a US helium reserve was established to support helium production, and the US is still a major world producer of helium, although recently demand outstripped supply)

        2. Which brings us to the trade deficit. American tax laws and trade laws in general have focused only on allowing corporations to maximize profitability no matter what the consequences with Job losses, technology transfers, or other long term downsides to the American people absolutely not in consideration. This is what needs to change, a far more complicated discussion than starting a trade war

        • Spacegoat
          May 15, 2019 at 7:52 pm

          This a long comment, but one of the most accurate one I have read on here for a long time.

        • Wisdom Seeker
          May 15, 2019 at 10:52 pm

          Gandalf – excellent comment.

          I agree, the US has been milking its existing cows – and giving them away! – without remembering that the future is in baby cows. And whoever has cows can make babies, so giving them away was a bad idea.

          I also agree with you that both FedGov and Wall Street are part of the problem and need to get moving towards the future solution.

          However, I also think the US has been far too generous in allowing other nations to rip us off. The free trade idea worked for a while, demolished soviet-style communism and brought billions out of poverty, but now too many other nations are gaming the system to their own lopsided advantage. The US needs a coordinated national response to this in addition to building up our own R&D. Otherwise our domestic R&D just feeds the others.

        • wkevinw
          May 16, 2019 at 1:58 pm

          Agree with the post-war abnormality of the American advantages. Also, Americans gave away a lot, which should not have happened.

          By the way, just because a big corp stops a given area of tech research, does not mean a free market can’t continue it in a different company. Laws (or lack of them!) have to be right to allow this.

          Anyway, yes, the advantage Americans had in manufacturing was abnormally high, but to this day, there are still advantages with respect to the rest of the world- I’ve worked on a few continents, so have seen it first hand.

        • John Taylor
          May 18, 2019 at 7:06 pm

          Nice analysis. The US has the reserve currency, the petro dollar. This has now been weaponized. If you do not economically support the US, the options are sanctions or bombs. Key industries in the us are Agriculture, oil, commercial aircraft and arms is #4. The US is all about hedgemony and empire. For others it is expansion of markets via globalism. The US is becoming increasingly desperate as seen through the Trump Trade War. I fear the ultimate destination to this economic fight is going to result in a shooting war.

    • bungee
      May 14, 2019 at 11:32 pm

      pretty cool observation. I think though that there are a lot of factors to determine number of cars and number of power. And not just weight and total length; also things like time required to cross important junctions and local rules depending on where they are heading
      buut….if you see the same length, all the time, going the same direction, on the same stretch of rail, with 4 or 5 power then maybe it’s safe to say those are full and these ones you are seeing now with only 2 are mostly empty, or lighter weight. I believe they usually move cars of like type together; empty with empty and full with full rather than a (too) mixed up bunch. Because of control issues with air braking systems and speed… etc. so it maybe them just moving stuff around? keep watching!

    • RailObs
      May 15, 2019 at 12:48 am

      Its observations like these that would be great to quantify have have in real time for the public so we can do away with all the “adjusted” crap masquerading as data.

    • Brant Lee
      May 15, 2019 at 8:36 am

      I suppose it’s the same with a ship loaded with empty containers headed back to China. They can pile them higher and pick up speed a few knots.

    • May 15, 2019 at 12:33 pm

      Y.R.C.WORDWIDE (FORMERLY
      YELLOW FREIGHT AND ROADWAY TRK. ) IS A TEAMSTER
      UNION COMPANY.
      J.B. HUNT IS NON UNION
      AND FEASTS ON TRUCKING
      SCHOOL GRADUATES PAYING THEM PEANUTS WHILE THEIR. EXECUTIVES EARN SIX FIGURES PLUS. THEY ARE THE LARGEST FULL
      LOAD CARRIER FOR THIS REASON.

      • May 15, 2019 at 2:55 pm

        David, welcome to this board. But please try to locate the “Caps Lock” key (usually on the left side of the keyboard) and deactivate it. I have seen people trying to pry it out with a screwdriver, but it’s just easier to tap on it once :-]

        Your next ALL CAPS comment will be blocked.

        • William
          May 16, 2019 at 7:10 pm

          So your against all capital letters in a post. ALL CAPITAL LETTERS MUST OFFEND YOU.

        • May 16, 2019 at 11:47 pm

          They’re just silly, hard to read, and a throwback to the telegram days. ALL_CAPS have no business on this site. To write a few words in CAPS for emphasis is OK. But an entire comment is just nonsense.

  2. AGXIIK
    May 14, 2019 at 10:57 pm

    How is the Baltic Dry Index doing too

    • OutLookingIn
      May 15, 2019 at 1:12 pm

      Baltic Dry Index Since December 01, 2018.

      The BDI dropped with a head shot at the beginning of December and subsequently fell over 800 points. Well below its 200 weekly moving average.

      Since its low point, it has barely made back 50% of the loss at +443 points and barely back above its 200 weekly moving average.

      All the slowing global economic fundamentals, point to an anticipated recession, or worse. The BDI is showing some seasonally cyclical strength here, however do not look for this to continue.

  3. EEngineer
    May 15, 2019 at 12:05 am

    I love your charts but can you take them back another decade? I think the crunch we’re starting to see is more comparable to the bigger 2008 one than the 2015 blip.

    • May 15, 2019 at 12:52 am

      The economy fell off a cliff in 2009 and the supply chains froze up. So the numbers are really of a different magnitude. In my lifetime, there has only been one such event, and there may not be another one. It distorts one’s thinking when everything gets compared to the worst economic event in my life time. I draw those comparisons occasionally anyway, but the current economy is far from that point.

      However, if things get closer to that level of supply-chain freeze-up, I might extend the charts. The thing is, with these long-duration charts, you lose all the detail of the current period. So extending the charts is not free.

      • Ppp
        May 15, 2019 at 10:56 am

        Wolf, just go to Zerohedge and read, “Global trade collapses…”. It is at 2009 levels now. Get on the reality train.

        • Wisdom Seeker
          May 15, 2019 at 2:13 pm

          That Zerohedge article is pointedly short on genuine data.

          The first chart just shows growth deceleration in China, not contraction. Growth deceleration in China is inevitable and long planned-for; nothing to see there.

          The second chart is some god-knows-what IMF metadata. “Trade direction statistics” LOL… I can find a dozen charts that will look like that, and none of them will mean a damn thing about anything real.

          ZeroHedge will get the call right one of these years, but they sell hype not reality. They’ve been early-wrong for pretty much the entire cycle since 2009…

          Zero’s still a fair read to get the contra take on the mainstream narrative, but it has to be read very carefully and skeptically.

  4. Shawn
    May 15, 2019 at 12:24 am

    The problem is two fold. One the trade dispute with China and subsequent tariffs are a large factor for the slowdown. If our economy wasn’t firing on all 8 cylinders the problems in the transportation sector would be much much worse than they currently are.

    Second the transportation industry is also partly responsible. They basically have shot themselves in the foot so to speak. In an effort to be more efficient, code word for how to cut cost and employees yet move ever increasing amounts of freight, they have raised their freight rates into the atmosphere and tacked on every single charge they could think of. Trucking companies started charging fuel surcharges, then they wanted pay for retention time, and when the truck driver shortage was at its peak they had to pay employees an arm and a leg for them to stay and drive. Railroads by contrast have now stumbled onto something called “Precision Schedule Railroading” that has train lengths increasing to 2 to 3 miles in length (highly uncommon until now) while trying to run these trains with a horsepower to tonnage ratio that barely has enough power to keep the cars moving. All in an effort to please their Wall Street overlords they have stockpiled equipment and laid off employees by the hundreds to thousands and now the unraveling this is causing is now beginning to be felt by everyone. Locomotive fails in route, don’t have enough power to make it over the line. 2 trains meet? Passing sidings aren’t long enough to accommodate the new super long super trains.

    • NickL
      May 15, 2019 at 8:34 am

      Huh you contradict yourself.. On one hand you mention economy firing on 8 cylinders.
      On the other “All in an effort to please their Wall Street overlords they have stockpiled equipment and laid off employees by the hundreds to thousands and now the unraveling this is causing is now beginning to be felt by everyone.””

      So which is it. again wouldn’t first time claims be rising if companies were laying people off by the thousands?? Trucking companies are having such a tough time finding drivers that they are paying for training in full as well as 5 figure sign on bonuses

    • John
      May 15, 2019 at 10:33 am

      Shawn
      Do you go to work and Just for hours and NOT get paid for your time
      I bet not

    • Erich
      May 15, 2019 at 2:29 pm

      I agree 100 percent with what you’re saying as far as the railroads are concerned. Precision Scheduled Railroading is a joke/sham. I say that as someone who just retired after 40 years in the industry. Closing yards (and selling off the land), storing and selling locomotives, laying off employees and (here’s the big one) cutting back on maintenance will come back to bite them in the ass big time. Those in the industry still remember the great Texas railroad meltdown of 1997 when the UP took over the SP. UP decided to close SP yards and downgrade lines … but hey, it looked good on paper. The resulting meltdown lasted for months with trains parked as far away as Arkansas and Oklahoma and gave the UP the nickname “Unlimited Parking”. Now lets try this on a NATIONAL scales and see if the results are any different!

      • Scott
        May 15, 2019 at 3:46 pm

        I’ve read a few articles about precision railroading and came away with two conclusions (not intending by the writers): that it’s a way to cut short term costs to appease activist investors (and likely hurt long-term performance) and that it shifts more costs onto customers through reduced service (isn’t this one of the reason that railroads were regulated in the first?). Am I missing something?

        • Erich
          May 15, 2019 at 5:27 pm

          That’s it exactly. Short term gain and long term pain.

  5. May 15, 2019 at 2:09 am

    Stockman, who often links to your site, emphasizes that the 2018 mini-boom was a response to tax cuts, plus preorders to beat the tariffs. Note that the trade war will not get settled with Meng Wanzhou held hostage in Canada.

    • nicko2
      May 15, 2019 at 2:19 am

      A Trump ban on Huawei is coming up next. Odds are this move to, will inevitably blow up in his face.

      • Harrold
        May 15, 2019 at 4:04 pm

        Ban on Huawei just announced by Pres Trump.

        I can’t wait to see the contortions politicians will be doing to support this.

        • Wisdom Seeker
          May 15, 2019 at 10:58 pm

          It’s really simple. We are once again in a multipolar world of great-power rivalry. Telecom is critical to national security. Whoever controls the infrastructure controls the espionage capability of that infrastructure. (Sadly, the US knows this deeply since it exploits the current infrastructure.) So long as China stands aside as a rival rather than a partner with the Western powers, Huawei tech is unacceptable on national security grounds. Too many unknown backdoors.

        • May 16, 2019 at 11:25 am

          If China has the backdoor keys they can capture data and sell it, which is what FB does?

    • Old Engineer
      May 15, 2019 at 8:44 am

      I was sitting here wondering why 2019 stood out so much above the cluster of the previous 7 years (2012-2018). You may have answered that question.
      It does seem like a basic tenet of capitalism that as tariffs cause the prices of goods to go up, fewer of them will be sold, so less shipping. I would assume that if the situation continues for several years alternate sources will be found and shipments may start an upward tick again.
      But I think U.S. confrontational approach to negotiation is counterproductive with Chinese culture, where maintaining “face” is probably as important as maintaining the economy for the fate of the political leadership. And the obsession with Huawei seems a pointless complication. It is going to be “interesting times”.

    • May 15, 2019 at 9:55 am

      Not sure about the tax cuts as reason (could be, but I just don’t see the direct link). But definitely the front-loading before the tariffs is a big factor. We can see that in the huge inventory buildup of durable goods, which I cover periodically.

    • glenn
      May 15, 2019 at 10:09 am

      At 50 cents per mile on 2500 miles average per week,with a q1 reported turnover of 94 % of drivers in the truck load industry, after taxes and expensess,the average truck driver is taking home 850.00 dollars on 168 hours a week.that averaged out to 5.05 an hour.Thats not being paid an arm and a leg!
      The down pressure is the market reaction to tarriffs,which are taxes on the consumer, regardless of whether they are stockholders,or blue collar.
      I see it as a market correction

      • Gw
        May 15, 2019 at 1:59 pm

        168 hrs.?, try about 80-90

        • Donald Wilkerson
          May 16, 2019 at 7:00 pm

          What world you live in. I am gone from home 28 days at a time. Home minimal. His hours was exactly correct. More to it then just Driving for a lot of us.

  6. TruckMan
    May 15, 2019 at 3:06 am

    Just had a load shipped international air freight. Lots of airlines begging for business, quotes much cheaper than last year. Load turned out heavier than expected, but my shipper found a different airline at the same price very rapidly. Handling agent only had one staff member on who was doing everything, and wasn’t overly busy. The freight area was 90% empty.

  7. Pam Cagle
    May 15, 2019 at 5:08 am

    Yield over volume is good for the company. But it’s the drivers who are really hurting. My 10 to 14hr days have turned into 3.5 to sometimes 10hrs a day. I do heavy haul export containers. Our company has sold several dry van contracts too. Getting scary for the driver.

    • NickL
      May 15, 2019 at 3:53 pm

      That’s life .. Like I have said constantly is that people need to continuously update their skills but instead waste money on pot, cable TV, and other crap. There is a definitely a large number of jobs (white collar middle class corporate jobs in large metro areas like NYC & Boston that are unfilled). If people are really hurting when the UE rate is 3.6% then obviously they are not employable in much else. Harsh ?? Maybe but trust me I am a lot nicer than what a hiring manager will say (usually behind closed doors)

      • alex in san jose AKA digital Detroit
        May 16, 2019 at 4:27 pm

        You can get all the skills you like but whether you get a job depends on who you know. Go to the right prep school and you’re set for life. Don’t go to a prep school at all and you may be highly skilled but you’ll end up sweeping floors.

  8. Charles Wilmoth
    May 15, 2019 at 5:26 am

    I have responded twice with real news about artificially inflated surcharge on a cost that doesn’t exist for fuel in the trucking industry,how the large fleets are paying less than 50% of Marquee price but charging DOE WEEKLY NATIONAL AVERAGE surcharge, I have absolute proof and yet you will not advance this comment on your site,why is that wolf.You part of the fraudulent scheme.This is largest Racketeering scam in American history,why aren’t you sharing the comment.I will be putting it out there on social media along with the ENTITIES I notified that refused to report or relay the information such as you and Freightwaves and the rest of the outfits.You got question,ask,print my email, I have nothing to hide,you got my permission,have a nice day Wolf

    • Paulo
      May 15, 2019 at 8:13 am

      I worked for the air charter industry when fuel costs were not just skyrocketing, but always changing. We had a fuel charges but mostly so we could more easily let the customer understand our billing structure. Many expenses were fixed, with issues like wages extrapolated on our stats from previous years. Likewise insurance. Insurance for a small aircraft was in the neighbourhood of $50,000 per year. Wages to run, dispatch, and maintain…maybe $150,000 per year. Rebuild costs and overhaul…etc etc etc. Contingencies? Built in. But fuel, there was no way to predict as the costs were always changing. With a fuel surcharge the customer always knew we were not screwing with them…they could see the costs. One day, a major forestry customer came in and started to complain about our costs. My boss threw down his keys on the desk and said, “You want to run an airline? Have at it. You have complaints about the costs? Send down an acountant and we’ll go over the books. Otherwise, unless you have a real idea to keep costs in line quit wasting my time”. And that was that. The fuel surcharge was a separate line item on every bill and had to be as we charged by the mile or by the hour. Our entire tariff structure would have to be revised…almost weekly. Helicopters are the same. Fuel is always a separate line item.

      We are living in volatile times, on the undulating plateau of declining ‘cheap’ oil. Cheap oil is mostly gone, already burned and used. Get used to it.

      • Paulo
        May 15, 2019 at 8:22 am

        I wanted to add…but forgot. Even if the trucking companies are using some secret cheaper source of fuel other than traditional bulk fuel suppliers, (which I doubt exist) the windfall would be used to offset other fixed expenses. I think the comment is a myth. It would be too big of secret to keep for sure.

        Bigger customers get discounts, and always have…to a point. Simple leverage. But fuel costs are regional and are in direct relationship to where the refinery sits and what stock they use in production, plus how that fuel is transported. YVR gets its fuel direct from a pipeline out of Alberta, fresh from refining. We had to bring in tank trucks from Bellingham out of storage. Now, guess whose fuel was/is cheaper?

    • May 15, 2019 at 10:13 am

      “I have absolute proof and yet you will not advance this comment on your site,why is that wolf.You part of the fraudulent scheme.This is largest Racketeering scam in American history,why aren’t you sharing.”

      WTF are you talking about?

      Just a quick search showed one comment of yours was published here on this topic before: https://wolfstreet.com/2019/01/05/trucking-boom-ends-next-phase-in-cycle-starts/#comment-168155

      But with today’s asinine statement, “wolf you part of the fraudulent scheme”, that you flung out there because you were too lazy to look up your prior comment, you’ve overstepped your commenting bounds in a big way.

    • Pizza Guy
      May 15, 2019 at 12:55 pm

      Its pretty common that all the ‘fuel charges’ that were tacked on when gas was up near $4 a gallon never got taken off even when oil dropped to $40 a barrel. Check with your local food delivery and notice the ‘fuel charge’.

      • alex in san jose AKA digital Detroit
        May 16, 2019 at 3:22 am

        I know that selling on Ebay, we get a real sweetheart deal on shipping from the USPS. Something like 40% off of what a “regular civilian” would pay. The difference when I do the shipping for Ebay items and went I want to mail something personally is pretty big.

        I wonder if there are some truckers finding a way to get by on “red” farming diesel, taxed less than “road” diesel? It’s not a good way to go, because I think you can get into some real trouble, but short-term it might be tempting.

  9. Deandre
    May 15, 2019 at 7:09 am

    It seems nobody wants to be a driver because of the stress low pay and bull crap they putting driver’s through

    • Eugene
      May 15, 2019 at 12:58 pm

      Its the same everywhere. Big corporations squeezing everyone else trying to get the maximum profits out of everyone. Wolf’s recent piece about internet advertising and how publishers of websites are being squeezed is just yet another of the many dots in that pattern. Unfortunately the end of that sequence is a few very big corporations and a big pile of road-kill.

  10. timbers
    May 15, 2019 at 7:11 am

    Speaking of the trade war with China:

    It was said the U.S. held all the cards and could crush China in a trade war.

    Sure doesn’t look to be going that way to me. China has in fact targeted U.S. farmers and that has damaged them and may threaten the President’s re-election.

    This targeting seems to have been effective, not ineffective as suggested here on this site.

    Also, Mr Market is putting pressure on Trump and Company to back off his trade war.

    To me, it looks like China holds most of the cards and presently is winning the war, though things can change of course. True this turn of events has much to do with the bad handling by Trump.

    Also, Wolf has pointed out Trump is going after the real reason the U.S. loses trade: Tax credits to move production overseas.

    But at the moment, the U.S. seems to be losing it’s trade war.

    I stand by my comments made many months ago, that a trade war with China could backfire.

    • Just Some Random Guy
      May 15, 2019 at 12:12 pm

      So farmers will vote for Bernie instead of Trump because China? LOL.
      I know you think farmers are idiots. But they realize this is a long war and they’re willing to lose a few battles to win it. On the other side, all the talking heads on CNBC can’t see past next quarter.

      In the long run China needs us 10X as much as we need them. Question is do we have the stomach to wait them out?

      • ooe
        May 15, 2019 at 9:02 pm

        The answer is no.

        1) Xi does not have an opposition party.
        2) Xi does not a free press that will report that misery that China is. However, the corporate press has reported how farmers are committing suicide and filing chapter 12 bankruptcy.
        3) Xi does not have to face the electorate in 18 months.

        • Wisdom Seeker
          May 15, 2019 at 11:06 pm

          ooe, on the other hand:

          1) Xi’s regime is much more fragile against dissent and social unrest
          2) Xi’s regime is far more strung out on unpayable debt
          3) History shows that leaders without opposition make more mistakes sooner. And they have to be paranoid.
          4) History also shows that leaders without opposition are frequently taken down by other means.
          5) From what I’ve seen – which could be wrong – the US electorate is solidly behind firming up trade policy with China. Do you see any US Presidential candidates running on a pro-China platform?

    • TXRancher
      May 15, 2019 at 4:33 pm

      How can this be hurting farmers when most are just planting or have just planted the crops? More farmers will be hurt because of the floods in middle America than tariffs.

  11. David Hall
    May 15, 2019 at 7:38 am

    The NASDAQ – Dotcom Crash was very scary. In 1999 companies with revenue growth but no earnings were rising in value. In Feb. of 2000 the market peaked. In March of 2000 Robert Shiller published “Irrational Exuberance.” The market continued selling off. The economy went into a recession. Housing prices were normal. On 9/11/01 Al Qaeda attacked NYC and DC. The stock market kept going down. NASDAQ crashed so bad, it took 17 years to regain its 2/2000 high. Car dealers had lots full of unsold cars. People stayed out of the market and started investing in real estate setting up the next bubble.

  12. Michael Engel
    May 15, 2019 at 8:47 am

    The DJT lower peak on Apr 24.
    It gap lower and declined til May 2, followed by a medium quality rally
    on lower volume.
    It was clear that Transport is in the grip of the bears.
    After six days of relentless red bars, the DJT looked tired on the short time frame.
    Yesterday it gap higher, but was stopped by the dma200 and the weekly ma50.
    If the DJT cannot breach the dma50 & dma200 above, it will be a low quality rally.
    If the DJT fail to go higher, it tell investors that the bear trend is powerful and the strong hands in charge, will send it down.
    The current move from the Apr 24 peak already retraced 79% the
    previous uptrend from Mar 25 low to the Apr 24 peak. That’s bearish.
    A Fibo 38%, 50% and 62% can tell where to expect support.
    The Dec 24 low might be breached.

  13. akiddy111
    May 15, 2019 at 10:13 am

    Back in the summer of 1995 i first saw a guy on the Louis Rukeyser show by the name of Ralph Acampora. He was regaling technical chart history to the panel. His forecast was for a storm to hit the markets soon. He did not think technicals looked good. The other panel members looked like they were becoming psyvholigically unnerved by his forecast.

    I had just opened my first ever Discount Brokerage Account with Scottsdale Securities in downtown Seattle and was paying $14.95 a trade (24 years ago). Later, Scottsdale Securities became Scottrade.

    I remember thinking that this Ralph guy seems to really know his stuff.

    Anyway, i stayed invested because i felt that i had another 40 years to weather ups and downs. Super glad i did.

    I think the Ralph guy is still going strong doing his thing.

    Thank You Michael.

  14. glenn
    May 15, 2019 at 10:19 am

    40 cents per mile to the driver,is 3.57 per hour.
    Cost per mile to operate a truck is 1.73 to break even,with every dollar earned revenue that nets only 4.8 cents. G

    • May 15, 2019 at 11:32 am

      a driver averages 8.9 mph?

      • Movin
        May 15, 2019 at 1:03 pm

        I don’t know the fact on the average, but one does have to remember that the truck is not always moving. And these days they all have speed regulators that limit the ability to make up time when a wide open empty highway is encountered.

        • May 15, 2019 at 4:49 pm

          I think 35mph is average at 80 hours a week at 40 cents a mile is $14 an hour. Union wages are a lot better.

    • Serge
      May 16, 2019 at 11:03 am

      Sure there are some big companies that take advantage for new drivers right out of school. But in reality it’s all about opportunity cost, you work as a driver for 50-60 cents a mile and make 1400-1800 a week. Where else can you make that kind of money? For most people it’s a lifestyle not a job.

  15. Senecas Cliff
    May 15, 2019 at 11:26 am

    Here in Portland the core of our non-service economy is a three legged stool based on Nike, Daimler (Freightliner) and Intel. Each of these segments is now under threat, from Tariffs (Nike), Semiconductor Slowdown (Intel) and the blues in the transportaion sector (Daimler). There have been no sign of layoffs yet ( it is too early for that) but for the financially well informed, it is like watching Wiley Coyote after he has run out over the edge of the cliff suspended in air waiting for gravity to take him.

  16. May 15, 2019 at 11:45 am

    Fuel prices will drop according to interest rates and high yield corporate bonds. They are also at the high end of the range, and shippers are tapping into entry level job market applicants. If this is as bad as it gets (shippers holding prices steady) there will be a short recession and a quick recovery. Money supply is shrinking and that means credit is getting tight, and that means those low (end of the range) inflation numbers won’t hold up either. If consumers get a hint that durables are rising in price there will be a surge in spending but with fuel prices dropping, and the global monetary machine providing liquidity, even if credit is tight on the margin, there will be overcapacity ( and inventories are high). Too few goods is the other half of the inflation equation, with too little money, its the other ‘flation.

    • Jeremy
      May 15, 2019 at 1:07 pm

      “even if credit is tight on the margin”

      Rich people forget that for most people it is a success to even climb high enough to see that margin.

  17. Just Some Random Guy
    May 15, 2019 at 12:08 pm

    Could it also be that there is less stuff sold because more people are outsourcing their services? Take me as an example. I don’t own a lawn-mower or trimmer or any of the other crap people have in their garage to take care of lawns. A few years ago, I did. When I moved, I decided, I don’t want to take all this crap with me since I hate lawn work. I pay someone to do it. And from what I see, pretty much everyone on my street has a lawn guy too. Which means all these households didn’t buy lawn equipment, which wasn’t shipped.

    People also cook less, so less kitchen stuff to buy. More people rely on Uber/Lyft instead of driving, so cars wear out less quickly, tires bought at longer intervals, etc.

    Plus an entire generation of yuuuthes now rents apartments instead of owning homes. Can’t fit as much stuff in an apartment as you can in a house, hence less stuff bought, less stuff shipped.

    This is a long term societal shift.

    • NickL
      May 15, 2019 at 3:57 pm

      Except rents have skyrocketed across the USA. $2,000 is the ‘new normal’ for a small 1 bedroom apt out in the suburbs where there is very limited or no public transport to speak of. You want to live in a “trendy neighborhood’ like TriBeca, Brooklyn Heights, Park Slope or Chelsea? Be prepared to spend over $4800 a month on rent

    • Lion
      May 15, 2019 at 4:50 pm

      Ah when I was a young man. Most people had a one car garage or none at all to store stuff in. Then by the 70’s seemed like most homes were built with two car garages, no room for the cars, but more room for stuff. Most homes were I live now have 3 car garages (ours is the smaller unit with just 2). Most of these owners cannot fit one car into their garage. So maybe in the future with less stuff, they will be able to at least park one car in the garage and not on the street. That’s a positive.

      • alex in san jose AKA digital Detroit
        May 16, 2019 at 4:40 pm

        I think the average Levittown house was something like 800 square feet, and people were raising several kids in them.

        Houses got big around the 1970s (along with the people) and the go-go 80s brought even bigger houses and the advent of the “snout house” look it up, it means a house with a sort of snout in front, where the cars go in and out. Such houses tend to fail the “trick or treat test” where, if go trick or treating, you can’t find the front door. Now we have the modern “McMansion” and funnily enough, people seem to care about that ol’ trick or treat test these days, so they put fancy big doorways with, I swear to God, columns, in front.

        So people going back to “living small” might be just a reversion to the mean.

  18. Rowen
    May 15, 2019 at 2:32 pm

    Down here (SC), they’re building an inland port, which would move a lot of containers between the port of Charleston to I-85 by rail, whereas in the past, it had been loaded directly between the ships and truck. The net effect will be to transfer some truck volume to rail, and to reduce labor demand for legacy union workers at the PoC.

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