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June 10 2019

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June 10 2019 | The Journal of Commerce 15 Cover Story changes in realized linehaul rates be- fore fuel surcharges or accessorials, was climbing at an 8.2 percent annu- alized rate per month clip toward an 11.1 percent peak last August. Since January 2019, the truckload linehaul index's rate of increase has dropped from 6.4 percent year over year to 2.7 percent. Sequentially, the index has decreased in three out of the first four months of 2019, dropping 1.1 percent in April. That brought the index 5.8 points down from its December peak of 144.2 to 138.4. That's the same reading as last August, when the index was expand- ing most rapidly. The decline led Broughton to lower his 2019 pricing outlook to a range of minus-2 to 1 percent. There are signs that domestic US freight demand can power through trade disruption, to an extent. The American Trucking Associations For-Hire Truck Ton- nage Index jumped 7.4 percent in April from March and climbed 7.7 percent year over year. A big part of that sequential increase, how- ever, came from seasonal adjust- ment of the underlying tonnage data. And the downward pressure on US imports has only begun. JOC email: twitter: @willbcassidy Less-than-truckload (LTL) carriers appear to be holding their own when it comes to pricing, largely because their capacity is more limited and because they've adopted technology and costing models that give them a pricing advantage. The days of trad- ing deep pricing discounts for LTL market share are becoming a distant memory. A year ago, the Cass Truckload Linehaul Index, which measures up 3.1 percent, and total inventories were up about 5.9 percent in the first quarter, the company said in its latest earnings report. The impact has been fewer loads moving on road and rail across the US. At least that was the case in the first quarter, as the five-month decline in shipments revealed by the Cass Freight Index demonstrated. The index, based on $25 billion worth of freight shipping a year, first dropped in December, falling 0.8 percent. Still, those decreases are off super-heated high points in 2018, also fed in part by front-loading of imports from China as US import- ers tried to get ahead of the tariffs imposed last July and September. And shipper expenditures on freight transportation were up 6.2 percent year over year in April, despite the months-long slide in spot market truckload pricing. Over a two-year period, the Cass Shipper Expenditure Index is up 19.8 percent. The index rose 0.7 per- cent from March to April. "Real- ized pricing power is still being reported at the contract level in some modes," Broughton said. Spot market weakness "suggests contract pricing is under increasing amounts of pressure and is at risk of going negative by the end of the year." That's truckload contract pricing. -10% -5% 0% 5% 10% 15% Apr-16 Jun- 16 Aug- 16 Oct-16 Dec- 16 Feb-17 Apr-17 Jun- 17 Aug- 17 Oct-17 Dec- 17 Feb-18 Apr-18 Jun- 18 Aug- 18 Oct-18 Dec- 18 Feb-19 Apr-19 Year over Year Change Cass Fr eight Shipments Index US surface volumes go negative after rising for two years Source: Cass Freight Index © 2019 IHS Markit Year-over-year change in Cass Freight Index

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