Cass TL Linehaul Index climbs amid shipment decline

Key Insight

The Cass Truckload (TL) Linehaul Index increased in December despite a decrease in overall shipment volume, indicating potential shifts in capacity utilization and pricing power within the truckload market.

Technical Analysis

The divergence between the increasing Linehaul Index (measuring per-mile truckload rates excluding fuel surcharges) and decreasing shipment volume suggests a tightening of capacity. This could be driven by several factors: reduced truck availability due to regulatory changes (e.g., ELD mandate enforcement), seasonal factors impacting driver availability (e.g., holidays), or a shift in demand towards specific lanes or equipment types where capacity is constrained. The index increase despite lower volume indicates that carriers are able to command higher rates on remaining shipments. Analyzing the historical correlation between the Cass Shipment Index and the Linehaul Index can help determine the significance of this divergence and predict future rate movements. Further investigation into specific lane data and equipment types would provide a more granular understanding of the capacity constraints.

The data from Cass, while valuable, requires careful interpretation. The index represents an aggregate view and doesn't account for variations in contract vs. spot market rates or the impact of specific shipper-carrier relationships. Detailed analysis of freight mix, average length of haul, and regional variations is needed to fully understand the underlying dynamics.

Impact Assessment

• Operations: Logistics operations may face increased difficulty securing truckload capacity and higher transportation costs. Routing and scheduling optimizations become critical to minimize empty miles and improve equipment utilization. Diversification of carrier base and increased reliance on spot market quoting may be necessary, but could introduce volatility.
• Technology: Transportation Management Systems (TMS) need to be configured to accurately reflect real-time market rates and incorporate predictive analytics to anticipate future capacity constraints. Integration with load boards and freight marketplaces becomes more important for accessing available capacity.
• Cost: Increased linehaul rates will directly increase transportation costs. This may necessitate renegotiation of contracts with carriers and exploration of alternative transportation modes (e.g., intermodal). Cost control measures, such as freight consolidation and optimized packaging, become more crucial.

Recommendation

Logistics engineers should conduct a detailed analysis of their company's freight network to identify lanes and equipment types most affected by the capacity constraints. This analysis should include reviewing historical shipment data, analyzing current market rates, and forecasting future demand. Based on this analysis, develop a mitigation strategy that may include: diversifying the carrier base, optimizing routing and scheduling, and exploring alternative transportation modes.

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Based on reporting from the original source. Original source: FreightWaves