Could it be that we have seen the peak in truckload rates and are now headed to the downturn while fuel begins to level out? The cost of fuel notwithstanding, we are seeing a major downturn in the cost of line haul for truckload shipments. As reflected in our average market rate index seen below, the line haul cost per mile has fallen from a high of $3.26 average cost per mile in January to $2.59 per mile in April.
The real instigator holding up rates at this time is the cost of fuel, which for the past month is averaging over $.60 cents per mile. It does appear from our Rockfarm measurements that March was the peak with fuel costs and, coupled with the lower rate per mile for line haul, we are now seeing the average truck rate move south to $3.56 to start the first half of April.
In a recent client call, it was suggested that the perspective in which we view our supply chains shouldn’t be linear, but a circular perspective that essentially illustrates what goes around comes around. Inventory levels are still fighting to get back to pre-pandemic levels and, with inflation on the rise, suppliers and manufacturers alike may push to add additional stock to the inventory to offset rising costs in raw materials and components. Add the issue of congestion to the mix, and the best we might see is regional spikes in freight costs throughout the remainder of the second quarter. The worst is a repeat of last summer.
For more information please reach out to our Supply Chain Coach team.
Brad’s journey into logistics began as a Marine Officer and transitioned from the LTL docks to the non-asset side within the logistics service provider arena. As a co-founder of Rockfarm, Brad drives our business development efforts and delivery of our promise. An Arizona native, Brad enjoys spending time outdoors in his home state with his wife and family.
“Our approach to the market allowed us an opportunity to push forward in 2008 and enable our mission, “lower the cost to serve” to stand as a cornerstone to our company today.”
Weber, Paul J. (2022 April). Texas Halts Inspections That Led to Border Gridlock
Ronan, Dan. (2022 April). Labor Leaders Optimistic Over Port Contract Talks
U.S. Census Bureau. (2022 April). MANUFACTURING AND TRADE INVENTORIES AND SALES, FEBRUARY 2022
Container News. (2022 April). On-day lockdown for all Japanese ports on 17 April
Maritime-Executive. (2022 April). Strict COVID-19 Lockdown Impacts Port Operations at Shanghai
Kennedy, Charles. (2022 April). U.S. Oil Drillers Ramp Up Output Amid Higher Prices
Port of L.A. Operations Report. (2022 April). Friday April 15, 2022 Report