The cost of freight took another big jump in June, increasing 11.7 percent month-to-month at 27.9 percent year-over-year, according to the latest Cass Freight Index, a measurement of the North American freight market.
The increase was largely attributed to modal mix, as the number of truckload moves increased compared to less than truckload. High fuel prices also contributed to the increase in rates, Cass noted. Despite the increase in freight costs, Cass believes industry rates will begin to level off as diesel prices fall.
With rates up, companies are spending more overall on freight, even as they ship less. Cass reported the number of shipments was down 2.6 percent compared to May but total spending rose by 8.8 percent month-to-month, or 25 percent year-over-year. Again, fuel costs were the primary driver, as Cass estimated about 10 percentage points of the year-over-year increase were due to fuel prices.
As noted in the latest Kuhne+Nagle Road Logistics Market Update, rate relief has been mostly limited to the short term spot market – the cost of a one-time shipment as determined by the real-time balance between carrier supply and demand. Pricing in the spot market has fallen as logistics managers have shifted away the spot market to long term contract shipping. Meanwhile. freight demand continues to grow as consumer spend and factories increase production, making it likely that upward pressure on trucking rates will continue for the rest of the year.
The good news is that transportation capacity is trending upward. Capacity rose for the second consecutive month in May, Kuehne+Nagle said, marking a turnaround from nearly two years of declines. The number of loads being rejected by carriers fell to 9 percent, compared to readings above 20 percent for all of 2021.