Holiday inventory surge supportive of double-digit-plus TL contract rates
The October Logistics Managers’ Index showed a big jump in inventories ahead of the holiday buying season, providing an added tailwind for truckload carriers, some of which have already entered a new bid season.
An October survey of supply chain executives confirmed what truckload carriers said on recent quarterly calls—that rates are likely to remain on the rise for the foreseeable future. The Logistics Managers’ Index, released Tuesday, showed further capacity declines alongside surging pricing.
Transportation utilization (63.5) continued to increase, but at a pace that was 2.6 points slower sequentially. Upstream companies (manufacturers and wholesalers) returned a 69.3 utilization reading, which was 16 points higher than downstream retailers.
Transportation prices (88) continued “expanding at a highly significant rate,” but at a pace that was 4.7 points slower. (Diesel fuel prices were down 1% sequentially during the month, up 70% y/y.)
While cost pressures tamped down truckload carriers’ earnings in the third quarter, the group expects to capture double-digit rate increases in the upcoming bid season.
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