Trucking Inflation

Clearly, fuel is a big part of inflationary pressure for transportation, but the shipper is really the one bearing a lot of that cost. The carrier eats the cost at first but then they pass it on. There are potentially some cashflow issues, but we are not seeing a significant problem there yet. They have gone through and have been raising interest rates to try to bring this down. In addition, over the last two years, inventories were already too low for the consumer market. The problem was exacerbated when China shut down for an extended period due to COVID-19 outbreaks. Dry van spot volumes started the year at close to record levels and then declined steadily before beginning to stabilize in April. There has been a similar dynamic in dry van spot rates, though it was much more gradual. Dry van spot metrics are also running below comparable 2021 levels both in volume and rates. The volume has fallen quite sharply this year from a record level heading into the year but we also see spot volume is still running way ahead of where it was prior to the pandemic. Further, total broker-posted dry van rates are about 63 cents below the record posted last year. And with the increase in diesel prices over the last four months, dry van rates are nearly $1 below the level they were last year. As of June, for-hire trucking employment reached an all-time high and is more than 74,000 jobs ahead of February 2020. There is clearly plenty of demand for drivers. If there weren’t, we wouldn’t be seeing that much hiring taking place.