A special edition of Marcoeconomic Monday today! The results are in and they are really showing a slowing economy (GDP adjustments have been lowered), inventory adjustments being made and therefore truckload and intermodal rates going down.
I have shown throughout this year that the inventory to sales ratio was telling me that inventory was growing at an unsustainable rate and sooner or later a correction will come. The Wall Street Journal recently acknowledged this with an article called: Inventory Pullback a Drag on Logistics Spending. As companies have realized the need to adjust inventory levels, the need for more product decreases and therefore the need for transportation goes down. Result? A capacity / demand imbalance that supports lower rates.
The newest CASS readings show this is coming out in the industry rate structure. The truckload index fell 1.2% in May after reductions in April and March. The intermodal index reduced by 2% and Cass has acknowledged this is 17 consecutive months of YoY declines.
Bottom line: Rates are going down, the economy continues to sputter and another year of "this is the year" seems to be fading away.
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