Also, the New York Fed's Underlying Inflation Gauge, which goes beyond more popular data sets like the consumer price index, rose to 3.2 percent in April, its highest reading since July 2006. The Atlanta Fed's Sticky-Price CPI gauge, a measure of goods whose prices are less prone to fluctuation, was up 2.5 percent in April, its highest level since February 2017.
Now, the rapid increase in trucking demand is beginning to gather attention, with some corners of the financial markets wondering how long it will take until broader inflation gauges are impacted.
"When you have price pressure that is above and beyond what's normal, someone has to eat it," said Peter Boockvar, chief investment officer at Bleakley Advisory Group. "The truckers are obviously going to charge more for their services because they can, the buyers of that stuff who need the trucks are not going to eat the cost. They're going to do their best to pass it down."
While the most recent reading of the producer price index showed just a 2.6 percent gain over the past 12 months, the freight subindexes told a different story: truck transportation jumped 6 percent, rail was up 5.1 percent and air rose 3.9 percent. Overall, the general freight trucking component is just below the all-time high it hit in February.
"April's 12.8% increase [in the Cass Freight Expenditures Index] clearly signals that capacity is tight, demand is strong, and shippers are willing to pay up for services to get goods picked up and delivered in modes throughout the transportation industry," he wrote. "We should also remind readers of a fundamental rule of marketplaces: volume leads pricing. Repeatedly we have watched in a host of different markets, that volume goes up before pricing starts to improve and volume goes down before pricing starts to weaken."
And the pricing indicators are quietly pointing higher.
Spot market rates for flatbeds were at $2.71 a mile for the week ended May 12, just a penny off the record they had set the week before, according to DAT. A number of trucking companies reported big rate jumps in the first quarter. Daseke said its rates were up 10 percent for flatbeds, while Universal Logistics Holdings said revenue per mile excluding fuel surcharges rose 12.7 percent annually, according to a Journal of Commerce report.
The surge in demand has led to driver shortages and sharp pay increases, which are likely to be ultimately passed onto consumers.
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