Rising Transport Costs Unavoidable?

A year ago, shippers hoped to hold transportation rate increases to the 4-5% range; other industry sources thought rates could rise by 8% or more. As it happened, rates spiked seasonally on the spot market in 2011, followed by steady increases in contract rates, according to Mark Montague, an analyst at TransCore Freight Solutions.

Contract rate increases landed between those two predictions, with a 6.5% increase through November, while spot market rates rose a full 7.4%, Montague reported in his blog. Spot market rates rose at an uneven pace throughout the year, especially for vans.

“In the first quarter, van rates advanced 14% over the year-earlier numbers but the gain slowed to 7.5% in the 2nd quarter,” he added. “Rate growth further slowed to 2.6% in the 3rd quarter before charging back for a 6% gain in Q4, compared to the same period in 2010.”

While spot market rate increases for both vans and reefers slowed in the second half, flatbed rates continued to beat their 2010 comparables well into the 2nd half of the year. Flatbed rate increases didn’t slow down until mid-November.

Increases in contract rates were spread evenly among equipment types. Van rates moved up 6.5% while flatbed and reefer rates increased 6.4% compared to 2010. Contract rates did not increase until the second half of the year for vans, the most common mode of trucking freight transportation. Flatbed and reefer rates changed gradually throughout the year.

Montague expects rates to continue rising in 2012 due to higher prices for fuel, insurance, labor, tires and equipment. Increases seem inevitable, no matter what shippers do.

“If the economy improves, the demand will increase pressure on scarce capacity,” he concluded. “If the economy stalls, carriers will park more trucks or exit the market entirely. Either way, expect rates to head up as soon as mid-March.”

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